For Checkersrallys franchises in California, what is the potential impact of the personal guarantee on a franchisee's marital and personal assets if they are married and the franchise fails?

According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees in California, along with their spouses, must sign a personal guarantee. This guarantee makes them individually liable for the financial obligations under the franchise agreement if they are married. Consequently, if the Checkersrallys franchise fails, the franchisee's and their spouse's marital and personal assets are at risk. This is explicitly highlighted in the disclosure addendum for California.

This requirement means that a franchisee's personal assets, such as savings, property, and investments, could be used to cover the debts and obligations of the failed Checkersrallys franchise. The inclusion of the spouse in the personal guarantee extends this risk to their individual assets as well, and any jointly owned marital assets. This is a significant risk factor that potential franchisees should carefully consider, especially in California.

It is important for prospective Checkersrallys franchisees in California to seek legal counsel to fully understand the implications of the personal guarantee. They should evaluate their financial situation and risk tolerance before signing the franchise agreement. Understanding the extent of personal liability and exploring options for asset protection are crucial steps in mitigating potential financial losses in case the franchise does not succeed. Franchisees should also be aware of California Corporations Code § 31512, which voids a waiver of rights under the Franchise Investment Law.