If a Bombs Away franchise 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.
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 the franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Bombs Away. This guaranty must be in the form of Attachment 2.
This requirement means that each owner of the entity is personally responsible for the financial and contractual obligations of the Bombs Away franchise. If the franchise fails to meet its obligations, Bombs Away can pursue the individual owners for fulfillment of those obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security.
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 associated with signing a personal guaranty.