Can Chatime require the spouse of a Guarantor to sign the Guaranty agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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, Chatime has the discretion to require the spouse of any or all Guarantors to sign the Guaranty agreement. A Guarantor is any person who owns or acquires any equity or voting interest in the Franchised Business. If any owner is an entity, Chatime has the right to have the Guaranty executed by individuals who have an indirect ownership interest in the company and their spouses, if applicable.
This means that if you are a franchisee, Chatime may require your spouse to also sign the guaranty, making them personally liable for your franchise's obligations. This is a significant point for prospective franchisees to consider, as it extends the financial risk of the franchise to their spouse.
It is important for potential franchisees to fully understand the implications of the Guaranty agreement and to seek legal counsel to review the agreement before signing. Franchisees should also inquire about the specific circumstances under which Chatime would require a spouse to sign the Guaranty, to better assess the potential risk.