Are the obligations of the Central Bark Doggy Day Care franchisee and its owners joint and several?
Central_Bark_Doggy_Day_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a Business Entity, each of your direct and indirect owners with a twenty percent (20%) or more ownership interest in you during the Term, and their spouses, will execute a guaranty in the form we prescribe undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between you and us. Our current form of guaranty is attached herein as Addendum 4. We confirm that a spouse who signs Addendum 4 solely in his or her capacity as a spouse (and not as an owner) is signing that agreement merely to acknowledge and consent to the execution of the guaranty by his or her spouse and to bind the assets of the marital estate as described therein and for no other purpose (including, to bind the spouse's own separate property).
Source: Item 1 — Franchisee shall have paid all Royalty Fees, advertising fund contributions, LAC contributions, amounts owed for purchases by Franchisee from Franchisor, or Franchisor's affiliates, and all other amounts owed to Franchisor, Franchisor's affiliates, and third-party creditors, and shall have submitted to Franchisor all required reports and statements; (FDD pages 106–233)
What This Means (2025 FDD)
According to Central Bark Doggy Day Care's 2025 Franchise Disclosure Document, if the franchisee is a business entity, the direct and indirect owners with a 20% or more ownership interest must execute a guaranty. This guaranty legally binds them jointly and severally to the franchise agreement's provisions and any related ancillary agreements. This means that Central Bark Doggy Day Care can pursue any of these owners individually for the full amount of any debt or obligation, rather than having to pursue each owner for their pro-rata share. Spouses signing the agreement solely to acknowledge consent and bind marital assets are an exception and are not bound to their separate property.
This requirement is a standard practice in franchising, as it provides the franchisor with added security that the obligations under the franchise agreement will be met. By having the owners personally guarantee the obligations of the business entity, Central Bark Doggy Day Care reduces its risk in the event that the business entity fails to perform its obligations. This also ensures that the owners are personally invested in the success of the Central Bark Doggy Day Care franchise.
For a prospective Central Bark Doggy Day Care franchisee, this means that if you own 20% or more of the franchise business through a company structure, you and your spouse (to the extent of marital assets) will be personally liable for the franchise's debts and obligations. It is important to carefully consider the implications of this personal guarantee and to seek legal advice before signing the franchise agreement and guaranty. Franchisees should understand the full extent of their potential liability and ensure they are comfortable with the risks involved.