For a Cool Binz franchise, if the franchisee is a limited liability company, who must execute the undertaking?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
NOTE: IF FRANCHISEE IS A CORPORATION, EACH OF FRANCHISEE'S SHAREHOLDERS AND THEIR SPOUSES MUST EXECUTE THE FOLLOWING UNDERTAKING. IF FRANCHISEE IS A PARTNERSHIP, EACH OF FRANCHISEE'S GENERAL PARTNERS AND THEIR SPOUSES MUST EXECUTE THE FOLLOWING UNDERTAKING. IF FRANCHISEE IS A LIMITED LIABILITY COMPANY, EACH OF FRANCHISEE'S MEMBERS AND MANAGERS AND THEIR SPOUSES MUST EXECUTE THE FOLLOWING UNDERTAKING.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if the franchisee is a limited liability company (LLC), each of the LLC's members and managers, along with their spouses, must execute the undertaking. This requirement is part of the Personal Guaranty and Guaranty of Spouses agreement.
This means that all individuals who are members or managers of the LLC, as well as their spouses, are personally guaranteeing the obligations of the franchise agreement. This is a common practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the individuals controlling the franchisee entity, not just the assets of the LLC itself.
For a prospective Cool Binz franchisee, this implies a significant personal financial commitment. Before forming an LLC to operate a Cool Binz franchise, potential franchisees should carefully consider the implications of this personal guarantee and consult with legal and financial advisors. They should also ensure that all members and managers of the LLC, as well as their spouses, are fully aware of and willing to accept this responsibility.