If the Dryject franchise owner is a trust, who is required to sign the Guaranty?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation, partnership or other legal entity, you must be newly formed and each direct or indirect owner of 20% or more of your equity will be required to personally guarantee all of the obligations of the Franchise Owner under the Franchise Agreement. (See Franchise Agreement Addendum C for the form of Guaranty Agreement). If you are owned by a trust, or if your owners are owned by one or more trusts, the trusts and the beneficiaries of the trusts must sign the Guaranty.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 38)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, if the franchise owner is a trust, the trust itself and the beneficiaries of the trust must sign the Guaranty Agreement. This requirement is part of ensuring that Dryject has recourse to assets and individuals who have a vested interest in the franchise's performance. This is especially important when the franchise is owned by an entity rather than an individual.
This requirement is in place because Dryject wants to ensure that all parties with a significant stake in the franchise are committed to fulfilling the obligations outlined in the Franchise Agreement. By having the trust and its beneficiaries sign the Guaranty, Dryject aims to mitigate the risk of non-compliance or default. This is a common practice in franchising, as franchisors often seek guarantees from individuals or entities associated with the franchisee to protect their interests.
For a prospective Dryject franchisee, this means that if they plan to operate the franchise through a trust, they need to be prepared for both the trust and its beneficiaries to sign the Guaranty Agreement. This requirement should be carefully considered during the planning stages, as it may have implications for the trust's structure and the beneficiaries' personal liability. It is advisable to seek legal counsel to fully understand the implications of signing the Guaranty Agreement and how it may affect the trust and its beneficiaries.