If the franchisee is an entity, what must the Desi District franchisee do regarding a personal guaranty?

According to Desi District's 2024 Franchise Disclosure Document, if the franchisee is a business entity, each owner of the entity must sign a personal guaranty. This guaranty ensures that the owners are personally responsible for the franchisee's obligations to Desi District. The personal guaranty must be in the form of Attachment 3 to the Franchise Agreement.

This requirement is a standard practice in franchising, as it provides the franchisor with additional security and recourse in case the franchisee defaults on its obligations. By requiring a personal guaranty, Desi District ensures that the owners of the franchisee entity are fully committed to the success of the franchise and are willing to be held personally liable for any failures.

The personal guaranty covers all obligations of the franchisee to Desi District, whether those obligations are financial or otherwise. This means that the guarantor is responsible for ensuring that the franchisee complies with all terms and conditions of the Franchise Agreement, including payment of fees, adherence to operational standards, and compliance with non-compete provisions. The guarantor also agrees to a non-compete agreement, both during the term of the Franchise Agreement and for two years after the agreement expires or is terminated.

Prospective franchisees should carefully review the terms of the personal guaranty and non-compete agreement before signing the Franchise Agreement. They should also consult with an attorney to understand the full extent of their obligations and potential liabilities. Attachment 3 to the Franchise Agreement contains the specific form that must be used for the personal guaranty.