If a franchisee obtains a loan, will Exit act as a co-signer?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee is and shall be an independent contractor, and nothing contained in this Agreement shall be construed to create a partnership, joint venture, employment or other relationship between parties. Neither Subfranchisor nor Franchisee shall act as an agent for the other or as guarantor or surety for the obligations of the other. Neither party shall be obligated for the debts or expenses of the other. Franchisee does not have the authority to bind or obligate EXIT or Subfranchisor in any way by any promise or representation.
Source: Item 10 — FINANCING (FDD page 19)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, Exit will not act as a guarantor or surety for the obligations of the franchisee. The agreement specifies that neither Exit nor the franchisee will act as an agent for the other, and neither party is obligated for the debts or expenses of the other. The franchisee does not have the authority to bind or obligate Exit in any way through any promise or representation.
This means that prospective Exit franchisees will need to secure financing for their business ventures independently, without relying on Exit to co-sign or guarantee any loans. This is a fairly standard practice in franchising, as franchisees are considered independent business owners. Franchisees should have a solid financial plan and credit history to obtain necessary funding.
This arrangement protects Exit from being liable for the financial obligations of its franchisees, while also ensuring that franchisees maintain control over their business operations and finances. Franchisees should carefully review their financial capabilities and explore various funding options to ensure they can meet their financial obligations under the franchise agreement.