Who is required to sign a personal guarantee of the Promissory Notes for a Buildingstars franchise?

According to Buildingstars's 2025 Franchise Disclosure Document, the owners of the franchise and their spouses are required to sign a personal guarantee of the Promissory Notes. This requirement is tied to the Promissory Notes associated with each Program's Franchise Agreement, which are detailed in Exhibit I of the Technician Franchise Agreement, Exhibit II of the On-Site Manager Franchise Agreement, and Exhibit III of the Corporate Franchise Agreement.

This personal guarantee means that these individuals are personally liable for the debt. If the Buildingstars franchisee defaults on the Promissory Note, the franchisor can pursue the owners and their spouses for the outstanding amount. This is a significant obligation, as it puts their personal assets at risk. The FDD also states that a default under the Promissory Note is considered a default under the Franchise Agreement itself, which could lead to termination of the franchise.

Personal guarantees are a fairly common practice in franchising, especially when financing is provided by the franchisor or a third-party lender. This guarantee reduces the lender's risk, as they have recourse to the personal assets of the franchisee and their spouse in case of default. Prospective Buildingstars franchisees should carefully consider the implications of signing a personal guarantee and ensure they understand the full extent of their financial obligations before entering into a franchise agreement.