Does the Batteries Plus Bulbs Franchise Agreement require a Personal Guaranty?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
- G. Guaranty. All Principal Owners of a Franchisee which is a corporation, partnership or other entity, will sign the Guaranty and Assumption Agreement in the form attached to this Agreement as Exhibit E (the "Guaranty Agreement"). Any person or entity that at any time after the date of this Agreement becomes a Principal Owner of Franchisee under the provisions of this Section 15 or otherwise will, as a condition of becoming a Principal Owner, sign the Guaranty Agreement. Franchisee will furnish to Franchisor at any time upon reasonable request a certified copy of the Articles of Incorporation or Articles of Organization and a list, in a form Franchisor reasonably requires, of all shareholders or members of record and all persons having a beneficial interest in any corporation or other entity that is or becomes a Franchisee.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, if the franchisee is a corporation, partnership, or other entity, all principal owners must sign a Guaranty and Assumption Agreement. This agreement is attached to the Franchise Agreement as Exhibit E, and is referred to as the "Guaranty Agreement". Furthermore, any person or entity that becomes a principal owner after the initial agreement date is also required to sign the Guaranty Agreement as a condition of becoming a principal owner.
This requirement means that principal owners are personally liable for the franchisee's obligations under the Franchise Agreement. This is a common practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the owners if the business entity fails to meet its financial or contractual obligations. The franchisee is also required to provide the franchisor with a certified copy of the Articles of Incorporation or Organization, along with a list of all shareholders or members of record, and all persons having a beneficial interest in the franchise.
For multiple-unit franchisees, the guarantors personally and unconditionally guarantee to Batteries Plus Bulbs that they will be bound by and liable for any breaches of the Multiple Unit Franchise Agreement, any Batteries Plus Bulbs franchise agreement between the franchisee or its affiliate and Batteries Plus Bulbs, or any other agreement between the franchisee or its affiliate and Batteries Plus Bulbs. The guarantors also guarantee the timely payment of all monies owed to Batteries Plus Bulbs and the timely performance of all other obligations stated in the agreements.
The guaranty includes waivers of certain rights, such as the right to require Batteries Plus Bulbs to take action against the franchisee or any other person as a condition of liability. The guarantor's liability is direct, independent, and joint and several with the franchisee and other guarantors, and it is not diminished by bankruptcy, insolvency, or any extensions of time or credit granted to the franchisee. Prospective franchisees should carefully review the Guaranty Agreement and understand the full extent of their personal liability before signing the Franchise Agreement.