Besides the franchisee, who else must provide a personal guaranty for the Cool Binz financing?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
r otherwise) | If you would like to finance a portion of the Initial Franchise Fee, Initial Package, and the Initial Promotional Package, and you meet our credit standards, you may do so through a promissory note (the "Note"), which is currently attached as Exhibit A-5 to the Franchise Agreement. You must make a down payment of at least fifty percent (50%) of the total fee you are financing. We currently charge an interest rate of 9%, and no finance charges. We will not adjust APR of the Note once your Franchise Agreement has been signed. A late fee of 5% or $50, per week, whichever sum is greater, will be collected if you fail to make timely payments or your payments are returned to us with non-sufficient funds. The only security we require is a personal guaranty of the Note by you and by all the owners, as well as all respective spouses, of the Fra
Source: Item 10 — FINANCING (FDD pages 35–36)
What This Means (2025 FDD)
According to the 2025 Cool Binz Franchise Disclosure Document, if Cool Binz finances a portion of the initial fees and package, the company requires a personal guaranty of the promissory note. This guaranty must be provided not only by the franchisee but also by all owners of the franchisee entity and their respective spouses.
This requirement means that if the franchisee is a corporation or partnership, all individuals with an ownership stake in that entity, along with their spouses, must also personally guarantee the financing. This is a significant commitment, as it makes these individuals personally liable for the debt should the Cool Binz franchise default on its payments. The personal guaranty is the only security that Cool Binz requires for the financing.
Personal guarantees are a fairly standard practice in franchising, especially for new franchisees or those with limited credit history. Franchisors use them to mitigate their risk and ensure that there is a strong incentive for the franchisee to meet their financial obligations. Prospective Cool Binz franchisees should carefully consider the implications of providing a personal guarantee and ensure they understand the full extent of their financial exposure.