For a Crave franchise, are the Principals individually obligated under the franchise agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.5 You may enter into the initial Franchise Agreement or any subsequent Franchise Agreement as required under this Agreement using a newly formed entity, such as a limited liability company, corporation or partnership for the sole purpose of entering into a Franchise Agreement and operating the CRAVE Franchised Business pursuant thereto, provided that you shall also personally sign such Franchise Agreement as a principal.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if a franchisee enters into the initial or any subsequent franchise agreement using a newly formed entity such as an LLC, corporation, or partnership, the franchisee must also personally sign the Franchise Agreement as a principal. This indicates that principals are individually obligated under the franchise agreement.
This requirement means that even if the franchise is owned and operated through a separate business entity, the individual signing as the principal is personally guaranteeing the obligations and responsibilities outlined in the Franchise Agreement. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and assurance that the franchisee is fully committed to the business.
By requiring a personal signature, Crave ensures that individuals with a significant stake in the franchise are directly accountable for its performance and adherence to the franchise agreement terms. Prospective franchisees should carefully consider this personal obligation and understand the potential implications before signing the agreement.