Is the Buildingstars standard form Guarantee attached to the Franchise Agreement?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation or limited liability company, all shareholders or members and their spouses of a corporate franchise or limited liability company franchise will sign our standard form Guarantee, which is attached to the Franchise Agreement. This Guarantee provides that each individual who signs is assuming and agreeing to discharge all obligations of the "Franchisee" under the Franchise Agreement.
Source: Item 15 — OBLIGATION OF THE FRANCHISEE TO PARTICIPATE IN THE ACTUAL OPERATION OF YOUR BUSINESS (FDD pages 28–29)
What This Means (2025 FDD)
According to Buildingstars' 2025 Franchise Disclosure Document, if the franchisee is a corporation or limited liability company, all shareholders or members and their spouses will sign Buildingstars' standard form Guarantee, which is attached to the Franchise Agreement. This Guarantee ensures that each individual who signs assumes and agrees to fulfill all obligations of the franchisee under the Franchise Agreement.
This requirement has significant implications for prospective Buildingstars franchisees who choose to operate under a corporate or LLC structure. It means that the personal assets of the shareholders, members, and their spouses could be at risk if the franchise fails to meet its financial or contractual obligations. The guarantee essentially extends the liability beyond the business entity to the individuals involved.
Franchisees should carefully consider the risks associated with this personal guarantee and seek legal and financial advice before signing the Franchise Agreement. They should also ensure they fully understand the terms of the Guarantee and the potential consequences of default. It is a common practice in franchising to require personal guarantees, especially from smaller or newly formed business entities, to provide the franchisor with additional security.