Are Franchisees personally liable for all fees due to Bang Cookies under the Ancillary Agreements?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
(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;
(5) All obligations of Franchisee under this Agreement and the Ancillary Agreements shall be assumed by the transferee, each individual owner of transferee, and their respective spouses in a manner satisfactory to Franchisor;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, under certain conditions, franchisees, their owners, and their spouses may be required to assume the obligations under the Ancillary Agreements.
Specifically, in the event of a transfer of the franchise, Bang Cookies requires that all obligations of the franchisee under the Franchise Agreement and the Ancillary Agreements be assumed by the transferee, each individual owner of the transferee, and their respective spouses, in a manner satisfactory to Bang Cookies. This means that if a franchisee sells their Bang Cookies business, the new owner and their spouse must agree to take on all the financial and operational responsibilities outlined in both the Franchise Agreement and any related Ancillary Agreements.
Furthermore, the FDD states that a franchisee can be in default of the franchise agreement if the franchisee, an owner, and/or a spouse breaches or is in default of an Ancillary Agreement, including, without limitation, the Franchise Owner and Spouse Agreement and Guaranty. This implies that these individuals can be held responsible for fulfilling the obligations within those ancillary agreements. Therefore, while the franchisee is the primary party responsible, owners and spouses may also have personal liability depending on the specific agreements and circumstances.