Does the B Bops indemnification extend to the Company's shareholders?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The undersigned persons hereby represent to B-Bop's Franchising Corp. ("Company") that they are partners or shareholders of the developer ("Developer") entering into the within and foregoing Multiple-Unit Development Agreement (the "Agreement"), of which this Personal Guaranty shall be deemed an integral part.
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- In consideration of the development rights granted to Developer hereunder and in order to induce Company to grant such development rights to Developer, each of the undersigned hereby agrees, jointly, individually and severally, for themselves, their heirs, legal representatives and assigns as follows: (a) that they, and each of them, shall be personally bound by and agree to perform all of the terms, provisions and conditions of this Agreement; (b) that they, and each of them, do hereby personally and unconditionally guarantee full and prompt payment to Company of any indebtedness of Developer arising under or by virtue of this Agreement; (c) that they, and each of them, will not sell, assign or otherwise permit or cause a transfer of the development rights or any partnership or stock interest in Developer without complying with the requirements of Section 13 of the Agreement; (d) that they, and each of them, shall be personally bound by the nondisclosure and noncompete covenants of this Agreement; and (e) that they, and each of them, shall be personally liable for the breach of any provision of this Agreement, including both monetary obligations and any obligation to take or refrain from taking specific actions or activities.
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- Each of the undersigned further agree as follows: (a) that this Guaranty shall be continuing and irrevocable; (b) that they, and each of them, shall render any payment or performance required under this Agreement upon demand if Developer fails or refuses promptly to do so; (c) such liability shall be primary and shall not be contingent upon Company pursuing or exhausting any remedies against Developer; (d) such liability shall not be waived, diminished or otherwise affected by any extension of time, credit or other indulgence which Company may from time to time grant to Developer; and (e) that they, and each of them, hereby waive notice of acceptance, demand, protest, nonperformance and of any other notices.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
Based on the 2025 B Bops Franchise Disclosure Document, the personal guaranty extends to the company's shareholders. Specifically, if the developer is a corporation, the shareholders of the developer agree to be personally bound by the terms of the Multiple-Unit Development Agreement. This means that the shareholders are guaranteeing the developer's obligations under the agreement.
The shareholders are responsible for the developer's debts and performance under the agreement. They must also comply with the non-disclosure and non-compete covenants outlined in the agreement. This obligation is continuing and irrevocable, meaning it remains in effect throughout the term of the agreement.
This arrangement ensures that B Bops has recourse to the personal assets of the shareholders if the developer fails to meet its obligations. It also motivates the shareholders to ensure the developer complies with the agreement. This is a common practice in franchising, particularly with multi-unit development agreements, as it provides an additional layer of security for the franchisor.