Does the personal guarantee for Bang Cookies extend to monetary obligations that may become due in the future?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts
and other debts, of whatever nature or kind, in a timely manner;
- (3) Franchisee, each Owner, and each Spouse must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (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. Each owner of the transferee shall also be required to execute such further agreements designated by Franchisor whereby the proposed transferee assumes each and every obligation and responsibility of Franchisee as set forth in this Agreement;
- (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;
- (6) Franchisee, each Owner, and each Spouse must execute the General Release attached to this Agreement as Exhibit 8 releasing Franchisor, Franchisor's affiliates and Franchisor's past and present officers, directors, shareholders, members, partners, agents, representatives, independent contractors, servants and employees, of any and all claims against Franchisor for matters arising on, or before, the effective date of the Transfer;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the personal guarantee for a Bang Cookies franchise extends to future monetary obligations when transferring ownership. Specifically, if a franchisee transfers their Bang Cookies business, the transferee (the new owner) and their spouse must execute a "Franchise Owner and Spouse Agreement and Guaranty." This agreement ensures the new owner is bound by all the terms and conditions of the franchise agreement.
Furthermore, the FDD states that the transferee must assume all obligations of the franchisee under the existing agreement. This includes any future financial responsibilities. The franchisor requires this to be done in a manner satisfactory to them, ensuring that all parties understand and agree to the terms. This requirement protects Bang Cookies by ensuring that new owners are fully committed to fulfilling the financial obligations of the franchise.
In the event of a transfer, Bang Cookies may require the transferee to execute the then-current standard form franchise agreement, which could supersede the original agreement. While the terms may differ, the new agreement must provide for the same Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in the original agreement. This ensures that the financial obligations remain consistent even with a change in ownership and a potentially updated franchise agreement.