Are the guarantors of a Cool Binz franchise agreement jointly and severally liable?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 the 2025 Cool Binz Franchise Disclosure Document, if the franchisee is a legal entity, all general partners, members, and direct/indirect equity holders must execute a personal guarantee. This guarantee ensures the full payment and performance of the legal entity's obligations to Cool Binz.
The agreement stipulates that these guarantors are bound individually, jointly, and severally by all the terms of the Franchise Agreement. This includes, but isn't limited to, restrictions on assignment. The personal guaranty must be in the form attached as Exhibit D to the FDD or another form that Cool Binz may prescribe from time to time.
The implication of joint and several liability is significant for the guarantors. Cool Binz can pursue any one guarantor for the full amount of the legal entity's debt or obligations, regardless of the ownership percentage or involvement of that guarantor. This means a guarantor could be responsible for the entire debt even if other guarantors exist and have the means to pay. This is a standard practice in franchising to provide additional security to the franchisor.