Under what circumstances would owners of a non-individual Caring Transitions franchisee be required to sign a personal guaranty?

According to Caring Transitions' 2025 Franchise Disclosure Document, owners of a non-individual franchisee are required to sign a personal guaranty. This requirement is outlined in Exhibit H of the franchise agreement, which specifically references the personal guaranty to be signed by these owners.

In practical terms, this means that if you are establishing a business entity (like a corporation or LLC) to operate your Caring Transitions franchise, rather than operating as an individual, the franchisor will require the owners of that entity to personally guarantee the obligations of the franchise agreement. This is a common practice in franchising, as it provides the franchisor with additional security, ensuring that individuals behind the business entity are personally liable for the franchise's performance and adherence to the agreement terms.

For prospective franchisees, this implies a significant personal financial risk. Should the franchise fail to meet its financial obligations or breach the franchise agreement, the franchisor can pursue the owners' personal assets to recover any losses. This is particularly important to consider in community property states like California, where such a guaranty could jeopardize marital assets, even for non-owner spouses. Therefore, it is crucial to fully understand the implications of the personal guaranty and seek legal counsel before signing the franchise agreement.