What agreement must each person with an ownership interest in the Cinch I.T. franchisee sign?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
our personal attributes and in consideration of the trust and confidence which We place in You, and on Your representation that You will actively and substantially participate personally in the beneficial ownership and management of the CINCH I.T. Franchised Business.
- (b) In the event You are a business entity (including but not limited to a corporation, a limited liability company, a partnership, a limited liability partnership, a trust), in addition to being newly formed, You must complete and sign the Principal Owner's Statement attached to this Agreement as Addendum D and each individual with an ownership interest in You must also sign Addendum D.
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, if the franchisee is a business entity, each individual with an ownership interest in that entity must sign the Guaranty Agreement, which is attached to the Franchise Agreement as Addendum C. Additionally, these individuals must complete and sign the Principal Owner's Statement, attached as Addendum D.
This requirement ensures that all individuals with a stake in the Cinch I.T. franchise are personally committed to upholding the terms of the Franchise Agreement. By signing the Guaranty Agreement, they become personally liable for the franchise's obligations to Cinch I.T. The Principal Owner's Statement provides Cinch I.T. with a clear record of who the owners are.
This is a fairly standard practice in franchising. Franchisors want to ensure that all owners are committed to the business and are willing to be held accountable. It also protects the franchisor in case the business entity fails to meet its obligations. Prospective franchisees should carefully review the Guaranty Agreement and Principal Owner's Statement to understand the full extent of their personal liability and obligations.