What is the purpose of the Owner and Spouse Agreement and Guaranty for a Cordova franchise?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is, at any time, a Corporate Entity, Franchisee agrees that each Owner and their respective Spouse shall execute, sign and deliver to Franchisor the Franchise Owner and Spouse Agreement and Guaranty attached to this Agreement as Exhibit 1 and, in doing so, among other things, will individually, jointly, and severally, guarantee Franchisee's obligations under this Agreement and personally bind themselves to confidentiality and non-competition covenants and restrictions.
Recitals and Representations
WHEREAS, Franchisee has entered into a Cordova Franchise Agreement (the "Franchise Agreement") for the development and operation of a Cordova business (the "Franchised Business" or "Cordova Business") that offers and provides IT staffing solutions, executive placement, software consulting, and related services and products (the "Approved Services and Products") under the Licensed Marks (defined below);
WHEREAS, you represent that you have received and have thoroughly reviewed the completed Franchise Agreement, including schedules and exhibits attached to the Franchise Agreement;
WHEREAS, we have recommended that you thoroughly review the Franchise Agreement, this Agreement and all schedules and exhibits to the Franchise Agreement with a lawyer selected and hired by you;
WHEREAS, you represent to us that you are either: (a) an Owner of Franchisee such that you own or control a legal, equitable or beneficial ownership or equity interest in Franchisee and/or otherwise meet the definition of an "Owner" as set forth in this Agreement; and/or (b) the "Spouse" of an Owner of Franchisee;
WHEREAS, you acknowledge that this Agreement will apply to you individually, jointly and severally with all others who sign this Agreement (including if this Agreement is signed in counterparts or electronically among other Owners and Spouses);
WHEREAS, you acknowledge that this Agreement, among other things, personally obligates you to guarantee Franchisee's obligations to us and obligates you to brand protection, confidentiality and noncompetition restrictions and covenants and that you enter into this Agreement to induce us to enter into the Franchise Agreement with Franchisee; and
WHEREAS, you acknowledge that we are relying on this Agreement and that without this Agreement we would not have entered into and/or would not be simultaneously entering into the Franchise Agreement with Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, the Owner and Spouse Agreement and Guaranty is a legally binding contract between Cordova Franchising, LLC and the owner(s) of the franchise, as well as their spouses. This agreement ensures that the owners and their spouses are individually, jointly, and severally obligated to guarantee the franchisee's obligations to Cordova. It also binds them to confidentiality and non-competition restrictions. Cordova requires this agreement to protect its brand, confidential information, and competitive position in the market.
The agreement is attached as Exhibit 1 to the Franchise Agreement. It is required when the franchisee is a corporate entity, each owner and their respective spouse must execute and deliver this agreement to Cordova. By signing this agreement, the owners and spouses acknowledge that they have thoroughly reviewed the Franchise Agreement and have been advised to seek legal counsel. They also acknowledge that Cordova is relying on this agreement as a condition for entering into the Franchise Agreement with the franchisee.
This agreement is crucial for Cordova because it provides an additional layer of security and protection. It ensures that the individuals behind the franchise, not just the corporate entity, are personally responsible for upholding the terms of the Franchise Agreement. This can be particularly important in cases where the corporate entity may not have sufficient assets to cover its obligations. The confidentiality and non-competition clauses further protect Cordova's interests by preventing owners and spouses from using confidential information or engaging in competitive activities, both during and after the term of the franchise agreement.
For a prospective Cordova franchisee, this means that if you are an owner of the franchise, or the spouse of an owner, you will be required to sign this agreement. It is essential to carefully review the agreement with an attorney to fully understand your obligations and potential liabilities. Failure to comply with the terms of the agreement can have significant legal and financial consequences.