What is the purpose of the Guaranty Agreement for a DryJect franchisee?
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;
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 DryJect Franchise Disclosure Document, the Guaranty Agreement is used when the franchisee is a business entity, such as a corporation or limited liability company. In these cases, DryJect requires individuals with a significant ownership stake (20% or greater) in the franchisee entity to sign a Guaranty Agreement. This agreement is attached to the Franchise Agreement as Addendum C.
The purpose of the Guaranty Agreement is to ensure that DryJect has recourse to the personal assets of the owners of the franchisee entity. This provides DryJect with an additional layer of security, as the franchisor can pursue the personal assets of the guarantors if the business entity fails to meet its financial obligations under the Franchise Agreement. This is a common practice in franchising, as it protects the franchisor from losses if a franchisee's business entity becomes insolvent.
Specifically, the FDD states that DryJect grants the franchise license in reliance on the personal attributes and active participation of individual owners. By requiring a personal guaranty, DryJect seeks to ensure that these individuals remain committed to the success of the franchise and are personally liable for its performance. The agreement also stipulates that the business entity formed by the franchisee should be newly formed and dedicated solely to operating the DryJect franchise, further emphasizing the franchisor's focus on the franchisee's commitment to the DryJect system.