Are the Owners of a Bens Soft Pretzels franchise required to sign a Personal Guarantee?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
All persons owning an interest in Franchisee that is a corporation, limited liability company, partnership or other legal entity must execute the form of undertaking and guarantee at the end of this Agreement.
Any person or entity that at any time after the date of this Agreement that becomes an owner pursuant to the provisions of Paragraph 11 or otherwise must execute the form of undertaking and guarantee at the end of this Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 34)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels FDD, all individuals or entities owning an interest in a Bens Soft Pretzels franchise are required to execute a form of undertaking and guarantee. This requirement extends to corporations, limited liability companies, partnerships, or any other legal entity that holds an ownership stake in the franchise. Furthermore, any person or entity that becomes an owner after the initial agreement date must also execute this guarantee.
This guarantee ensures that the owners are personally liable for the franchise's obligations under the Franchise Agreement. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract by the franchisee. The personal guarantee essentially means that the owner's personal assets are at risk if the franchise fails to meet its financial or contractual obligations.
For a prospective Bens Soft Pretzels franchisee, this requirement has significant implications. It means that they cannot shield themselves completely behind a corporate entity and must be willing to personally guarantee the franchise's performance. Before signing the Franchise Agreement, potential franchisees should carefully review the terms of the guarantee and understand the full extent of their personal liability. They may want to seek legal and financial advice to assess the risks involved and determine whether they are comfortable with this level of personal exposure.
In the event of a transfer of ownership, the original owners and guarantors may still be obligated to guarantee performance under the Franchise Agreement if they retain a security interest or other financial interest in the business, such as in an installment sale. This obligation continues until the final close of the installment sale or the termination of their interest. Additionally, during a transfer, each owner and guarantor must sign a general release of all claims related to the Franchise Agreement, the store, or the business relationship, in a form designated by Bens Soft Pretzels.