Are personal guarantees required from the transferee in the Burneys Sweets More Franchise Agreement?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN AGREEMENT | SUMMARY | |
|---|---|---|---|
| l. | Franchisor's approval of transfer by franchisee | Franchise Agreement § 13(c)(ii), 13(d), 13(e) | Except for limited circumstances, our prior written approval is required for all transfers. The franchise can be terminated for non compliance. We will not unreasonably withhold approval. |
| m. Conditions for Franchisor's approval of transfer | Franchise Agreement § 13(d), 13(e) | You must be in compliance with the Franchise Agreement, refurbish as we require, and execute a general release. Transferee must have a credit rating, moral character, reputation and business qualifications satisfactory to us, and must meet all then current requirements of new franchisees. Transferee must attend and successfully complete our initial training, and execute the Franchise Agreement and collateral agreements in the then-current form, including personal guarantees. If a sale is involved, you must offer us a 45-day right of first refusal and a transfer fee of 50% of the then-current initial franchise fee must be paid. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 41–46)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, a personal guarantee may be required from the transferee in the event of a franchise transfer. Specifically, the FDD states that the transferee must execute the Franchise Agreement and collateral agreements in the then-current form, including personal guarantees. This requirement is part of the conditions for Burneys Sweets More's approval of the transfer.
This condition means that if you decide to sell your Burneys Sweets More franchise, the person or entity buying it (the transferee) may need to provide a personal guarantee. A personal guarantee is a legal promise that the transferee will be personally responsible for the financial obligations of the franchise. This could include debts, leases, or other liabilities. The requirement for a personal guarantee protects Burneys Sweets More by ensuring that someone is personally liable for the franchise's performance.
It is important for prospective franchisees to understand that the specific terms and conditions, including the requirement for personal guarantees, are subject to the Franchise Agreement in its then-current form at the time of the transfer. This means that the requirements could change over time. Therefore, it is crucial to review the most current version of the Franchise Agreement and any related collateral agreements to fully understand the obligations of a transferee.
In addition to the personal guarantee, the transferee must also meet other requirements, such as having a satisfactory credit rating, moral character, reputation, and business qualifications. They must also attend and successfully complete Burneys Sweets More's initial training. The franchisee must also be in compliance with the Franchise Agreement, refurbish as Burneys Sweets More requires, and execute a general release. The franchisee must offer Burneys Sweets More a 45-day right of first refusal and pay a transfer fee of 50% of the then-current initial franchise fee.