Are the principals of a Bumper Man franchise individually liable for the obligations of the franchisee?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
greements in a form we require.
Your principals will be individually and jointly and severally bound by all of your obligations and the obligations of principals under the Franchise Agreement by signing the Guaranty and Undertaking of Principal's Obligations, attached to the Franchise Agreement as Exhibit B. If you are married, your spouse must sign a Guaranty and Undertaking of Principal's Obligations, regardless of whether she has any interest in the franchisee entity that you establish.
ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
You must sell and may only sell the bumper repair services and products we have approved.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, the principals of a Bumper Man franchise are indeed individually bound by the obligations of the franchisee. This is achieved through the signing of a Guaranty and Undertaking of Principal's Obligations, which is attached to the Franchise Agreement as Exhibit B. This means that the individuals with a controlling ownership in the franchisee entity (such as shareholders, members, or partners) are personally responsible for ensuring the franchisee meets its obligations under the Franchise Agreement.
This requirement extends to the spouse of the franchisee, who must also sign the Guaranty and Undertaking of Principal's Obligations, regardless of whether they have any ownership interest in the franchisee entity. This ensures that the franchisor has additional security and recourse in case of default or breach of contract by the franchisee. The FDD also states that the principal unconditionally agrees to be personally bound by, and personally liable for, the breach of each and every provision in the Agreement, both monetary obligations and obligations.
This is a significant point for prospective Bumper Man franchisees to consider, as it means their personal assets could be at risk if the franchise does not perform as expected or if the franchisee fails to meet its contractual obligations. It is common in franchising for franchisors to seek personal guarantees from the principals of a franchisee, especially when the franchisee is a corporate entity, to ensure accountability and commitment to the franchise system.
Furthermore, the obligations of the franchisee's principals, including compliance with restrictive covenants and indemnification responsibilities, survive the termination or expiration of the Franchise Agreement. This means that even after the franchise relationship ends, the principals may still be held liable for certain obligations, such as those related to confidentiality, non-competition, and indemnification. Therefore, prospective franchisees should carefully review the Guaranty and Undertaking of Principal's Obligations and understand the full extent of their personal liability before investing in a Bumper Man franchise.