What is the cross-guarantee provision in the Benjamin Franklin Plumbing franchise agreement?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.5. Cross-Guarantee.
In the event Franchisee or Franchisee's affiliate now holds or later acquires any interest in a Franchised Business other than the Franchised Business franchised under this Agreement, Franchisee shall unconditionally guarantee full performance and discharge of all of the franchisee's obligations under the franchise agreement for such other Franchised Business, including without limitation the payment of all Royalty Fees, advertising fees, and other obligations.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing FDD, the cross-guarantee provision stipulates that if a franchisee or their affiliate holds interest in another franchised business, they must unconditionally guarantee the full performance and discharge of all obligations under that franchise agreement. This includes, but is not limited to, the payment of all Royalty Fees, advertising fees, and other financial responsibilities.
In practical terms, this means that if a Benjamin Franklin Plumbing franchisee decides to invest in or acquire another franchise, their financial obligations to Benjamin Franklin Plumbing are linked to the performance of the other franchise. If the other franchise fails to meet its financial obligations, Benjamin Franklin Plumbing can hold the franchisee accountable, potentially impacting their original Benjamin Franklin Plumbing franchise.
This provision is designed to protect Benjamin Franklin Plumbing from financial losses if a franchisee diversifies into other franchise ventures that become financially unstable. It ensures that franchisees with multiple business interests remain fully committed to meeting their obligations to Benjamin Franklin Plumbing, regardless of the performance of their other ventures. Franchisees should carefully consider this cross-guarantee provision before investing in additional franchise opportunities, as it creates a financial interdependency between their various business ventures.