What is the purpose of Addendum C to the Cinch I.T. Franchise Agreement?
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 the 2024 Cinch I.T. Franchise Disclosure Document, Addendum C to the Franchise Agreement serves as a Guaranty Agreement. If the franchisee is a business entity, such as a corporation, limited liability company, partnership, or trust, each individual with an ownership interest in that entity must sign Addendum C. This agreement ensures that each owner personally guarantees the franchisee's obligations under the Franchise Agreement.
This requirement is in addition to the business entity itself being newly formed and meeting specific organizational and operational criteria. The business entity must complete and sign the Principal Owner's Statement attached as Addendum D, and each individual owner must also sign Addendum D, listing all ownership interests accurately. The business entity must be duly organized, validly existing under the laws of its state, and qualified to do business in all necessary jurisdictions.
The purpose of the Guaranty Agreement is to provide Cinch I.T. with additional security and recourse in case the franchisee, as a business entity, fails to meet its obligations. By having each owner personally guarantee the agreement, Cinch I.T. can pursue the personal assets of the owners if the business entity defaults. This is a common practice in franchising to ensure the commitment and financial responsibility of the individuals behind the franchise operation.