Who is required to sign a guaranty and assumption of obligations for a Chatime franchise?
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 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 41–42)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the grant of a franchise is based on the personal attributes of the company's owners and managers. Each person who owns or acquires any equity or voting interest in the franchised business, whether legally or beneficially, must execute and deliver a guaranty and assumption of obligations agreement to Chatime. This agreement is in the form attached as Exhibit 3 to the Franchise Agreement.
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 has 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. Franchisees are required to provide Chatime with a list of all holders of legal and beneficial interests in the franchised business, including descriptions of the type of interests owned, the percentage ownership, and the names, addresses, email addresses, and telephone numbers of the owners, certified as correct in the manner specified by Chatime.
Furthermore, franchisees must notify Chatime within 10 days if any of their general partners, managers, officers, or directors ceases to serve in such a capacity or if any new person becomes a general partner, manager, officer, or director after the date of the agreement. Any breach of a guaranty will be considered a breach of the Franchise Agreement. This ensures that Chatime has recourse to the personal assets of those in control of the franchise should the franchise default on its obligations.