What guaranty is required from a Crown Gold Exchange franchisee when transferring the agreement for convenience of ownership?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
e;
- (viii) Franchisee, its Owners, and the transferee and its owners execute a general release of Crown Gold Franchising in a form satisfactory to Crown Gold Franchising; and
- (ix) the Business fully complies with all of Crown Gold Franchising's most recent System Standards.
- 15.3 Transfer for Convenience of Ownership. If Franchisee is an individual, Franchisee may Transfer this Agreement to a corporation or limited liability company formed for the convenience of ownership after at least 15 days' notice to Crown Gold Franchising, if, prior to the Transfer: (1) the transferee provides the information required by Section 2.3;
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if a franchisee who is an individual wants to transfer the franchise agreement to a corporation or limited liability company for ownership convenience, they must provide a guaranty as outlined in Section 2.5 of the agreement. This transfer can occur after giving Crown Gold Franchising at least 15 days' notice.
To complete the transfer, the franchisee must meet several conditions. First, the entity taking over the franchise must provide the information required by Section 2.3 of the franchise agreement. The franchisee must also supply copies of the entity's charter documents, by-laws, or operating agreement if Crown Gold Franchising requests them. Critically, the franchisee must own all voting securities of the new corporation or LLC.
Section 2.5, referenced in the transfer conditions, specifies that if the franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Crown Gold Franchising, using the form provided as Attachment 3 to the franchise agreement. This means the individual franchisee is personally guaranteeing the entity's performance under the franchise agreement, even after the transfer.