Are the principals of a Bumper Man franchise jointly liable for the obligations of the franchisee?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 jointly liable for the obligations of the franchisee. This is formalized through a Guaranty and Undertaking of Principal's Obligations, which all principals are required to sign. This agreement is attached as Exhibit B to the Franchise Agreement. Furthermore, if the principal is married, their spouse must also sign this guaranty, regardless of whether they have any ownership interest in the franchisee entity. This ensures that Bumper Man has recourse to the personal assets of the principals and their spouses should the franchisee fail to meet its obligations.
This requirement has significant implications for prospective Bumper Man franchisees. It means that the personal assets of the principals and their spouses are at risk if the franchise does not perform well or if the franchisee breaches the Franchise Agreement. The guaranty essentially makes the principals personal guarantors of the franchise's debts and obligations to Bumper Man. This is a common practice in franchising, as it provides the franchisor with added security and incentivizes the principals to actively manage and ensure the success of the franchise.
The FDD also states that the term "you" refers to the person buying the franchise, the franchisee. If the franchisee is a corporation, limited liability company or other business entity, the term "principals" refers to any individual or entity with a controlling ownership in the franchisee (including shareholders of a corporation, members of a limited liability company, general and limited partners of a limited partnership, etc.).
In summary, prospective Bumper Man franchisees should carefully consider the implications of the personal guaranty and understand that their personal assets, and those of their spouses, could be at risk. It is advisable to seek legal and financial advice before signing the Franchise Agreement and the Guaranty and Undertaking of Principal's Obligations.