Who is required to guarantee all Notes associated with Corcoran financing?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
- [5] All Notes must be guaranteed by the Franchisee as well as personally guaranteed by all shareholders, partners, interest holders and their respective spouses, as required by us.
You must sign a Security Agreement at the time you sign the Franchise Agreement, for all the Franchises' assets, including after acquired property, and we will file a UCC-1 financing statement for the Business' assets with the appropriate state government authority. (See Exhibit E to the Franchise Agreement or Exhibit D-3.) We have the right to require additional forms of security.
Source: Item 10 — FINANCING (FDD pages 45–48)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, all Notes must be guaranteed by the franchisee. In addition to the franchisee, all shareholders, partners, interest holders, and their respective spouses are required to personally guarantee the Notes, as required by Corcoran. This requirement ensures that Corcoran has multiple parties responsible for the debt, reducing the risk of default.
This requirement is a significant consideration for prospective Corcoran franchisees. It means that not only is the franchise business itself responsible for the debt, but also the personal assets of the franchisee, their partners, shareholders, interest holders, and their spouses are at risk. This is a common practice in franchising, as it provides the franchisor with added security and recourse in case of financial difficulties.
Furthermore, the franchisee must sign a Security Agreement, granting Corcoran a security interest in all of the franchise's assets, including any property acquired after the agreement is signed. Corcoran will also file a UCC-1 financing statement with the appropriate state government authority to perfect its security interest. This gives Corcoran a legal claim on the franchise's assets in the event of default, allowing them to seize and sell the assets to recover the outstanding debt. Franchisees should carefully consider these requirements and seek legal and financial advice before signing any agreements.