For a City Wide franchise, what attachment to the Franchise Agreement must all partners, shareholders, officers, and directors of the entity executing the Franchise Agreement execute?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Agreement, the terms "Franchisee" and "Franchisee's" will include all persons who succeed to the interest of the original Franchisee by transfer or operation of law. If Franchisee is a legal entity, then at least one natural person will have at least a majority ownership interest in Franchisee. By their signatures to this Agreement, all partners, shareholders, officers, and directors of the entity that sign this Agreement as Franchisee acknowledge and accept the duties and obligations imposed upon each of them, individually, by the terms of this Agreement. The singular usage includes the plural, and the masculine usage includes the feminine. All partners, shareholders, officers, and directors of the entity executing the Franchise Agreement are required to execute the Guaranty and Assumption of Obligations which is attached to this Franchise Agreement as Attachment A-1. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as Attachment A-2.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if the franchisee is a legal entity, all partners, shareholders, officers, and directors of that entity must execute the Guaranty and Assumption of Obligations. This document is attached to the Franchise Agreement as Attachment A-1. This requirement ensures that these individuals acknowledge and accept the duties and obligations imposed upon them by the terms of the Franchise Agreement.
This provision is significant because it holds the individuals in leadership positions of the franchisee entity personally responsible for the franchise's performance and adherence to the agreement. It is a common practice in franchising to seek guarantees from key individuals to protect the franchisor's interests.
Additionally, the FDD states that spouses or domestic partners of principals, owners, or stockholders will be required to provide a conditional guaranty of payment in the form attached to the Agreement as Attachment A-2. This further secures the financial obligations of the franchise by involving the personal assets of the owners and their spouses or domestic partners.