Does the Bang Cookies franchise agreement specify that the franchisee's owners are jointly and severally liable for the franchisee's obligations?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that the foregoing covenants and obligations shall also apply to: (a) Franchisee's Owners and Spouses and that Franchisee's Owners and Spouses shall each execute and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1;
(4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee and their respective spouses shall personally execute the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1.
(l) Franchisee, an Owner, and/or a Spouse, as applicable and whether individually or jointly, breaches or is in default of an Ancillary Agreement, and, if the applicable agreement provides for the opportunity to cure, fails to timely cure the breach or default of the Ancillary Agreement, including, without limitation, the Franchise Owner and Spouse Agreement and Guaranty;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, the franchise agreement stipulates that the franchisee's owners and their spouses must execute a 'Franchise Owner and Spouse Agreement and Guaranty.' This agreement ensures that these individuals are bound by the terms of the franchise agreement. Specifically, in the event of a transfer of the franchise, the owners and spouses of the transferee must also execute this agreement, ensuring they assume all obligations of the franchisee. This requirement extends to compliance with restrictive covenants, including those related to confidential information and know-how, where owners and spouses must adhere to the same confidentiality and non-competition obligations as the franchisee. This is a common practice in franchising to ensure the franchisor's interests are protected.
Furthermore, the FDD indicates that if a franchisee, an owner, and/or a spouse breaches any ancillary agreement, including the Franchise Owner and Spouse Agreement and Guaranty, it can result in a default of the franchise agreement. This clause underscores the importance of the owners' and spouses' adherence to the terms, as their actions directly impact the franchisee's compliance and the overall standing of the franchise. This provision is designed to prevent actions by owners or spouses that could harm the Bang Cookies brand or system.
In practical terms, this means that prospective Bang Cookies franchisees should be aware that their owners and spouses will be required to sign a guaranty, making them personally liable for the franchisee's obligations. This liability extends to various aspects of the franchise agreement, including financial obligations, compliance with operational standards, and adherence to confidentiality and non-competition clauses. Franchisees should ensure that their owners and spouses fully understand the implications of this guaranty before entering into the franchise agreement. This requirement is in place to protect Bang Cookies and the integrity of its brand by ensuring that all parties with a significant interest in the franchise are committed to upholding its standards and obligations.