Is the grant of the Cool Binz franchise dependent on all required parties executing the personal guaranty?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
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 equity interest 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 D or in such other form as we may from time to time prescribe.
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 legal entity such as a corporation, partnership, or LLC, certain individuals associated with that entity must execute a personal guaranty. Specifically, all general partners, members, and all direct and indirect holders of equity interest are required to execute an agreement personally guaranteeing the legal entity's obligations to Cool Binz. This agreement ensures the full payment and performance of the legal entity's duties to Cool Binz. The personal guaranty must be in the form attached as Exhibit D to the Franchise Agreement or in another form prescribed by Cool Binz.
For corporations, each of the franchisee's shareholders and their spouses must execute the undertaking. If the franchisee is a partnership, each of the franchisee's general partners and their spouses must execute the undertaking. If the franchisee is a limited liability company, each of the franchisee's members and managers and their spouses must execute the undertaking. This requirement extends to spouses of the shareholders, general partners, members, and managers, indicating that Cool Binz seeks a comprehensive guarantee of the franchisee's obligations.
The personal guaranty binds these individuals, jointly and severally, to all the terms of the Franchise Agreement, including restrictions on assignment. This means that each guarantor is individually responsible for the entire obligation, as well as collectively responsible with the other guarantors. This provision is designed to protect Cool Binz by ensuring that there are multiple parties responsible for the franchisee's performance and financial obligations.
In practical terms, this requirement means that prospective Cool Binz franchisees who operate through a legal entity must ensure that all relevant parties (owners, partners, members, and their spouses) are willing to sign the personal guaranty. Failure to secure these guarantees could prevent the legal entity from being granted the Cool Binz franchise. This is a significant consideration for franchisees structuring their business as a legal entity, as it places personal financial responsibility on the individuals involved.