Must all owners of the proposed assignee provide a guaranty when a Bombs Away franchise is transferred?

According to Bombs Away's 2024 Franchise Disclosure Document, when a franchisee transfers their franchise, all owners of the proposed assignee must provide a guaranty. This requirement is one of the conditions Bombs Away may impose when granting consent for a transfer.

This means that if a franchisee wishes to sell or transfer their Bombs Away franchise to a new entity, all individuals who own a stake in that new entity must personally guarantee the obligations of the franchise agreement. This guaranty is executed in favor of Bombs Away Franchising, LLC. The guaranty ensures that Bombs Away has recourse to the personal assets of the new owners if the franchise fails to meet its financial or contractual obligations.

The document also includes an example of the Guaranty and Non-Compete Agreement that each guarantor must sign. This agreement ensures that the Guarantor will guarantee the franchisee's obligations to Bombs Away Franchising. The guarantor also agrees to certain covenants not to compete with Bombs Away during the term of the Franchise Agreement and for two years after the agreement expires or is terminated.

This requirement is fairly standard in franchising, as it provides an additional layer of security for the franchisor. Prospective franchisees should carefully review the guaranty agreement and understand the full extent of their personal liability before proceeding with a franchise transfer.