If the Bombs Away business is owned by an entity, what agreement must all owners sign?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
2.5 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to Bombs Away Franchising, in the form of Attachment 2.
2.6 No Conflict. Franchisee represents to Bombs Away Franchising that Franchisee and each of its Owners (i) are not violating any agreement (including any confidentiality or non-competition covenant) by entering into or performing under this Agreement, (ii) are not a direct or indirect owner of any Competitor, and (iii) are not listed or "blocked" in connection with, and are not in violation under, any anti-terrorism law, regulation, or executive order.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 26–27)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, if a franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Bombs Away. This guaranty is in the form of Attachment 2 to the Franchise Agreement.
This requirement means that Bombs Away seeks to ensure that the financial obligations of the franchise are backed by the personal assets of the owners of the entity. This is a common practice in franchising, as it provides the franchisor with an additional layer of security in case the franchisee's business fails. The personal guaranty makes each owner personally liable for the debts and obligations of the franchise.
Prospective Bombs Away franchisees should carefully review Attachment 2, the personal guaranty form, to fully understand the scope of their personal liability. They should also consult with an attorney and financial advisor to assess the risks and implications of signing such a guaranty. Franchisees should also be aware that they must represent that they are not violating any existing agreements by entering into the Bombs Away Franchise Agreement.