Does the Guaranty agreement for the Cream franchise impose any prohibited actions on the Guarantor?

According to the 2025 FDD, the Guaranty and Assumption of Obligations agreement for Cream franchisees does place certain restrictions and obligations on the Guarantor. Specifically, if the Franchise Owner is delinquent in payments, a Guarantor that is a business entity, retirement or investment account, or trust is prohibited from making any dividends or distributions to its owners, accountholders, or beneficiaries while the delinquency exists, unless otherwise provided by law. This ensures that the Guarantor prioritizes fulfilling the financial obligations of the Franchise Owner to Cream.

Furthermore, the Guarantor agrees to be personally bound by and liable for any breaches of the franchise agreement, including obligations to take or refrain from specific actions, such as those related to non-competition, confidentiality, and transfer requirements. This means the Guarantor's responsibilities extend beyond just financial guarantees and include adherence to all operational and legal aspects of the franchise agreement. The Guarantor also consents to the incorporation of the enforcement provisions of the Franchise Agreement, including those related to arbitration, jurisdiction, and legal fees, meaning they will be responsible for Cream's legal costs associated with enforcing the guaranty.

These provisions are typical in franchise agreements to ensure that Cream has recourse to protect its interests and brand standards. Prospective Cream franchisees should carefully review the Guaranty and Assumption of Obligations agreement with their legal and financial advisors to fully understand the scope of their obligations and potential liabilities as a Guarantor. It is also important to note that the spouse of the Guarantor may also be required to acknowledge and consent to the guaranty, potentially binding the assets of the marital estate.