Does the Craters & Freighters franchise agreement require a personal guaranty from the franchisee?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| In consideration of, and as an inducement to, the execution of the above Franchise Agreement | |
|---|---|
| ("Agreement") by Craters & Freighters Franchise Company ("Franchisor"), each of the undersigned (each | |
| a "Guarantor" and, collectively, the "Guarantors") hereby personally and unconditionally (1) guarantees | |
| to Company and its affiliates and their successors and assigns, for the term of the Agreement and thereafter | |
| as provided in the Agreement, that ("Franchisee") will punctually pay and | |
| perform each and every undertaking, agreement and covenant set for the in the Agreement and (2) agrees | |
| personally to be bound by, and personally liable for the breach of, each and every provision in this |
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the franchise agreement requires a personal guaranty. Specifically, the document states that each guarantor personally and unconditionally guarantees that the franchisee will punctually pay and perform every undertaking, agreement, and covenant set forth in the Franchise Agreement. The guarantor also agrees to be personally bound by, and personally liable for the breach of, each and every provision in the agreement.
This means that if the franchisee, which is the business entity, fails to meet its financial or operational obligations under the Franchise Agreement, Craters & Freighters can seek recourse directly from the guarantor's personal assets. This is a significant commitment, as it puts the guarantor's personal wealth at risk.
Personal guarantees are a common practice in franchising, especially when the franchisee is a newly formed entity with limited operating history or assets. The personal guarantee provides the franchisor with an added layer of security, ensuring that there is a responsible party who is fully committed to the success of the franchise and is willing to stand behind the business's obligations. Prospective Craters & Freighters franchisees should carefully consider the implications of providing a personal guarantee and seek legal and financial advice before signing the Franchise Agreement.