If the Cr3 American Exteriors franchisee is an entity, who must personally guarantee the debt?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
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| x. Dispute resolution | 9 | 17 |
ITEM 10 FINANCING
We offer the following financing program:
| Item Financed1 | All or a Portion of the Initial Franchise Fee. | |
|---|---|---|
| Source of Financing2 | Us | |
| Down Payment | Varies | |
| Amount Financed | Up to 100% | |
| Interest Rate/Finance Charge | 12% per annum (including finance charges) | |
| Period of Repayment | Varies | |
| Security Required | The Franchised Business including all accounts, equipment, furniture, and assets and any earnings from any financial services business; Personal guarantee. | |
| Whether a Person Other than the Franchisee | If the franchisee is an entity, its owners must | |
| Must Personally Guarantee the Debt3 | personally guarantee the debt | |
| Prepayment Penalty | None | |
| Liability Upon Default | Accelerated obligation to pay the entire amount due, pay our court costs and attorney fees incurred in collecting the debt, and termination of the franchise. | |
| Waiver of Defenses or Other Legal Rights | Waiver of right to jury trial; homestead and other exemptions; waiver of presentment, demand, protest, notice of dishonor. | |
| Intent to Sell4 | There is no intent to sell, assign or factor the debt to a third party. | |
| Consideration for placement of financing5 | None | 1 Discretionary-We may in our sole discretion provide financing to you. |
2 Form-Schedule 7 of the Franchise Agreement contains the form of Promissory Note that you must sign for
us to extend financing to you.
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
According to Cr3 American Exteriors's 2025 Franchise Disclosure Document, if the franchisee is an entity, its owners must personally guarantee the debt. Schedule 7 of the Franchise Agreement contains the form of Promissory Note that you must sign for us to extend financing to you. If the franchisee is a corporation, each officer and shareholder of the franchisee must execute a personal guaranty for the note, agreeing to be personally and jointly and severally liable for its repayment. Schedule 7 has the Promissory Note that must be executed.
This means that if a franchisee chooses to operate their Cr3 American Exteriors franchise through a business entity like an LLC or a corporation, the individuals behind that entity (owners, officers, and shareholders) are required to provide a personal guarantee for any financing obtained from Cr3 American Exteriors. This is a common practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the individuals controlling the franchise in case of default.
The personal guarantee essentially makes the franchisee's owners, officers, and shareholders responsible for the debt of the business. This could put their personal assets at risk if the Cr3 American Exteriors franchise fails to meet its financial obligations. The franchisee should carefully consider the implications of providing a personal guarantee and seek legal and financial advice before signing any agreements.
Prospective Cr3 American Exteriors franchisees should review Schedule 7 of the Franchise Agreement, which contains the Promissory Note, to fully understand the terms and conditions of the personal guarantee. They should also assess their own financial situation and risk tolerance before deciding to proceed with the franchise opportunity.