Are guarantors of the Counselor Realty Franchise Agreement also subject to Sections 7.2 (b), (c), and (d)?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) You agree that the covenants contained in this Section 7.2 are reasonable and understand that your willingness to agree to such covenants is an important inducement and consideration for our entering into this Agreement. You must demonstrate compliance with this Section 7.2. Sections 7.2 (b), (c) and (d) also apply to guarantors of this Agreement, your spouse and children if Franchisee is a sole proprietorship, and your officers, directors, employees, partners, and each principal shareholder or owner if Franchisee is a corporation or other entity.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to the 2025 Counselor Realty Franchise Disclosure Document, Sections 7.2 (b), (c), and (d) of the franchise agreement apply to guarantors. This means that anyone who guarantees the agreement is also bound by the confidentiality, non-compete, and non-solicitation clauses outlined in those sections.
Specifically, Section 7.2(b) restricts the disclosure and use of confidential information or trade secrets during and after the franchise term. Section 7.2(c) prevents the franchisee from owning an interest in or working for a competing real estate brokerage within 50 miles of the Counselor Realty office during the term of the agreement without prior written approval. Section 7.2(d) prohibits the franchisee from soliciting Counselor Realty's agents, employees, or independent contractors for 24 months after the agreement expires, terminates, or is transferred.
This provision ensures that Counselor Realty can protect its business interests and confidential information, even if the franchisee is not directly operating the business. Guarantors should be aware of these restrictions before signing the guaranty, as they will be personally liable for any breaches of these sections. This is a fairly standard practice in franchising, as franchisors seek to protect their brand and system from misuse or competition, regardless of who is guaranteeing the franchisee's obligations.