Does the Clear Pest Pros Franchise Agreement require a Guaranty and Assumption of Franchisee's Obligations?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
e that the issuance and transfer of any interest in the legal entity is restricted by the terms of this Agreement. Copies of such documents and of resolutions of the legal entity's board of directors or managers authorizing its entry into this Agreement shall be furnished to us upon request.
- b All general partners, members and all direct and indirect holders of an equity interest in the Franchisee shall, upon the legal entity's execution of this Agreement, execute an agreement personally guaranteeing to us the full payment and performance of the legal entity's obligations to us and undertaking to be bound, individually, jointly and severally, by all the terms of this Agreement including, without limitation, the restrictions on assignment contained herein. The personal guaranty shall be in the form attached hereto as Exhibit A-3 or in such other form as we may from time to time prescribe.
- c. The legal entity shall not use the name "Clear Pest Pros" or any other Mark, or any name deceptively similar thereto, except to reflect its franchise relationship with us. Neither the legal entity nor any of its owners may issue or sell, or offer to issue or sell, any securities of the legal entity or an affiliate of the legal entity, regardless of whether such sale or offer would be required to be registered pursuant to the provisions of the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, without obtaining our prior written consent, which is in our sole discretion, and complying with all of our requirements and restrictions concerning use of information about us.
- d.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to the 2025 Clear Pest Pros Franchise Disclosure Document, if the franchisee is a legal entity such as a partnership, Limited Liability Company (LLC), or corporation, all general partners, members, and direct/indirect equity holders must execute an agreement personally guaranteeing the legal entity's obligations to Clear Pest Pros. This agreement ensures that these individuals are jointly and severally bound by all terms of the Franchise Agreement. The personal guaranty will be in the form attached as Exhibit A-3 or another form prescribed by Clear Pest Pros.
This requirement means that even if the franchise is owned by a company, the individuals behind that company are still personally liable for the franchise's performance and financial obligations to Clear Pest Pros. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and ensures that the individuals with a vested interest in the franchise are committed to its success.
Furthermore, in the event of an installment sale where the franchisee provides financing to a transferee, the franchisee must continue to guarantee performance and all payment obligations to Clear Pest Pros until the final closing of the installment sale or final payment of such structured payment arrangement. Also, if the franchisee finances any part of the sale price, they must assure that the transferee's obligations are subordinate to the obligation to pay royalties and other amounts due to Clear Pest Pros and reaffirm their guaranty of the Franchise Agreement. This ensures Clear Pest Pros's financial interests are protected during a transfer of ownership.