Does the Guaranty for Big Blue Swim School cover obligations of any owners of the franchisee?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
your creditors or any financial institution. Any security interest that may be created in this Agreement by virtue of Section 9-408 of the Uniform Commercial Code is limited as described in Section 9-408(d) of the Uniform Commercial Code.
17.C. Conditions for Approval of Transfer
If you and your owners are in full compliance with this Agreement, then, subject to this Section 17's other provisions:
We will approve the transfer of a non-controlling ownership interest in you if the proposed transferee and its owners are of good moral character, have no ownership interest
in and do not perform services for (and have no affiliates with an ownership interest in or performing services for) a Competitive Business, otherwise meet our
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School FDD, Exhibit B outlines the Guaranty and Assumption of Obligations. Specifically, if a franchisee seeks to transfer a non-controlling ownership interest, the proposed transferee and its owners must sign Big Blue Swim School's then-current form of Guaranty and Assumption of Obligations. This indicates that the owners of the transferee (the party receiving the ownership interest) are required to sign the Guaranty, suggesting it covers their obligations as well.
This requirement ensures that Big Blue Swim School maintains a consistent level of financial security and commitment from all individuals involved in the franchise, even those with non-controlling interests. By requiring owners to sign the Guaranty, Big Blue Swim School aims to protect its interests and ensure that all parties are held accountable for the franchise's performance and adherence to the franchise agreement.
Prospective franchisees should carefully review Exhibit B and the then-current form of Guaranty and Assumption of Obligations to fully understand the scope of the obligations covered and the implications for themselves and any potential owners involved in a transfer of ownership. It is also important to consult with a legal professional to assess the specific risks and responsibilities associated with the Guaranty before signing any agreements.