If the DryJect franchisee is a business entity, what is the Operating Principal's role?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
ill actively and substantially participate personally in the beneficial ownership and management of the DryJect Franchised Business.
- (b) In the event You are a business entity (including but not limited to a corporation, a limited liability corporation, a partnership, a limited liability partnership, a trust), in addition to being newly formed, You must complete and sign the Principal Owner's Statement attached to this Agreement as Addendum D and each individual with an ownership interest in You must also sign Addendum D. Further, You represent, warrant and covenant that:
- (i) You are newly formed and duly organized and validly exist under the laws of the state in which You were formed;
- (ii) You are duly qualified and are authorized to do business in each jurisdiction in which Your business activities or the nature of the properties owned by You require such qualification;
- (iii) The execution of and transactions contemplated by this Agreement are within Your powers;
- (iv) The ownership interests in You are accurately and fully listed in Addendum D;
- (v) Each and every person with a twenty percent (20%) or greater ownership interest in You shall sign the Guaranty Agreement attached to this Agreement as Addendum C and You shall provide the original signed Guaranty Agreement to Us;
- (vi) Each of Your shareholders/members shall execute and deliver the Confidentiality and Non-Competition Agreement set forth in the Operations Manual and You shall provide a copy to Us;
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to DryJect's 2025 Franchise Disclosure Document, if the franchisee is a business entity, each individual with an ownership interest in the entity must sign Addendum D, the Principal Owner's Statement. Furthermore, each person with a twenty percent (20%) or greater ownership interest in the business entity must sign the Guaranty Agreement (Addendum C). These individuals also must agree to be jointly and severally personally liable for the franchisee's payment and performance of the Franchise Agreement. They must also execute and deliver the Confidentiality and Non-Competition Agreement.
In practical terms, this means that DryJect seeks to ensure that individuals with significant financial stakes in a franchisee business entity are personally committed to upholding the franchise agreement. By requiring personal guarantees and non-compete agreements from these individuals, DryJect aims to protect its brand, trade secrets, and overall system. This is a common practice in franchising, as it aligns the interests of the franchisor and the key stakeholders of the franchisee.
This requirement has several implications for prospective DryJect franchisees. First, individuals considering forming a business entity to operate a DryJect franchise should be aware that their personal assets may be at risk if the business fails to meet its financial obligations or violates the franchise agreement. Second, potential owners should carefully review the Guaranty Agreement and Non-Competition Agreement to understand the full extent of their personal obligations. Finally, the owners must ensure that all shareholders/members execute and deliver the Confidentiality and Non-Competition Agreement set forth in the Operations Manual and provide a copy to DryJect.