Who must execute and deliver a guaranty and assumption of obligations to the Chatime Franchisor for renewal?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
2.7 Guaranty.
Franchisor's grant of this franchise is made in reliance on the personal attributes of your company's owners and managers named in Section 2 of Schedule 1. Each person who now or later owns or acquires, either legally or beneficially, any equity or voting interest in your Franchised Business (the "Guarantor" or "Guarantors"), must execute and deliver to Franchisor a guaranty and assumption of obligations agreement in a form attached as Exhibit 3. Franchisor may require the spouse of any or all Guarantors to sign the Guaranty in our discretion. If any owner is an entity, we have the right to have the Guaranty executed by individuals who have an indirect ownership interest in your company and their spouses, if applicable. Upon our request at any time, Franchisee will furnish to Franchisor a list of all holders of legal and beneficial interests in your Franchised Business together with descriptions of the type of interests owned and the percentage ownership, and the names, addresses, email addresses and telephone numbers of the Owners, certified as correct in the manner we specify. If any of Franchisee's general partners, managers, officers or directors ceases to serve as such or if any new person becomes a general partner, manager, officer or director after the date of this Agreement, you will notify us of such change within 10 days. Any breach of a Guaranty will be deemed to be a breach of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the franchisor's grant of the franchise is based on the personal attributes of the company's owners and managers, as detailed in Section 2 of Schedule 1. Each individual who currently or in the future owns or acquires any equity or voting interest in the franchised business, legally or beneficially, is considered a "Guarantor." These Guarantors must execute and deliver a guaranty and assumption of obligations agreement, using the form attached as Exhibit 3.
Chatime may also require the spouse of any or all Guarantors to sign the Guaranty at their discretion. If any owner is an entity, Chatime reserves the right to have the Guaranty executed by individuals who have an indirect ownership interest in the company, as well as their spouses if applicable. Upon request, the franchisee must provide a list of all holders of legal and beneficial interests in the franchised business, including descriptions of the type of interests owned, percentage ownership, and contact information of the Owners, certified as correct.
Furthermore, the document states that any breach of a Guaranty will be considered a breach of the Franchise Agreement. This means that the personal guarantees are a critical component of the franchise agreement, and failure to uphold the obligations within the guaranty can have significant consequences for the franchisee. This requirement ensures that Chatime has recourse to the personal assets of the owners and managers, providing an additional layer of security for the franchisor.