What does the personal guaranty in the Cool Binz franchise agreement guarantee?
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 such as a partnership, LLC, or corporation, all general partners, members, and direct/indirect equity holders must execute an agreement personally guaranteeing the legal entity's obligations to Cool Binz. This agreement ensures that these individuals are bound, both individually and jointly, to fulfill all terms of the Franchise Agreement. This includes, but isn't limited to, the restrictions on assignment outlined in the agreement.
The personal guaranty must be in the form attached as Exhibit D to the Franchise Agreement or another form that Cool Binz may prescribe from time to time. This ensures Cool Binz has recourse to the personal assets of the owners and equity holders should the business entity fail to meet its financial or other obligations under the agreement.
This requirement is a standard practice in franchising, as it provides an additional layer of security for the franchisor. It mitigates the risk associated with franchisees operating under a corporate structure, where liability might otherwise be limited to the business entity's assets. Prospective Cool Binz franchisees should carefully review Exhibit D and understand the full scope of their personal obligations before signing the Franchise Agreement.