Are all owners of a Bombs Away franchise required to execute personal guarantees in California?

According to Bombs Away's 2024 Franchise Disclosure Document, all owners of a Bombs Away franchise in California will be required to execute personal guarantees. This requirement puts the marital assets of spouses domiciled in community property states, including California, at risk if the franchise fails.

A personal guarantee means that the franchisee is personally liable for the debts and obligations of the franchise business. If the Bombs Away franchise incurs debt or other liabilities that it cannot pay, the franchisor can pursue the franchisee's personal assets to satisfy those debts. This can include bank accounts, real estate, and other personal property.

For prospective Bombs Away franchisees in California, this is a significant risk to consider. It is advisable to seek legal and financial advice to fully understand the implications of signing a personal guarantee and to explore options for mitigating this risk. Franchisees should assess their personal financial situation and risk tolerance before committing to the franchise.