What are the requirements for the guaranty that the transferee must execute in a transfer of a Counselor Realty franchise?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything contained herein to the contrary, Counselor's consent will not be required for, and the right of first refusal set forth in Section 9.6 will not apply to, a transfer described in clause (iv) of the first sentence of this Section 9.1 if (x) such transfer (in a single transaction or series of related transactions) will not result in a change in Control of Franchisee or such direct or indirect owner of Franchisee, (y) you provide Counselor with written notice of such transfer, together with such other information concerning such transfer and transferee as we may require, at least thirty (30) days prior to the consummation of such transfer, and (z) if such transfer is a transfer of an ownership interest in Franchisee, such transferee executes the guaranty attached to this Agreement and delivers such guaranty to Counselor within ten (10) days of such transfer.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, a guaranty is required in specific transfer scenarios. Specifically, if the transfer involves a transfer of ownership interest in the Franchisee, the transferee must execute the guaranty attached to the Franchise Agreement and deliver it to Counselor Realty within ten days of the transfer. This requirement is waived if the transfer does not result in a change of control of the Franchisee.
This condition ensures that Counselor Realty has recourse against the transferee in case of any defaults or breaches of the franchise agreement. The guaranty essentially makes the transferee personally liable for the obligations of the franchisee entity. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.
Prospective franchisees should carefully review the guaranty attached to the Franchise Agreement to understand the full extent of their obligations and potential liabilities. They should also consult with an attorney to assess the implications of signing such a guaranty. Understanding these requirements is crucial before proceeding with a transfer of ownership in a Counselor Realty franchise.