If the Exit franchisee is a partnership, must all partners sign the Personal Guaranty?

According to Exit's 2025 Franchise Disclosure Document, if a franchisee operates as a partnership, all equity holders in the company must execute a Personal Guaranty of the Franchise Agreement. This requirement ensures that all individuals with an ownership stake in the Exit franchise are personally liable for the financial and contractual obligations of the franchise. This is a common practice in franchising to provide the franchisor with additional security and recourse in case of default or breach of contract.

For a prospective Exit franchisee, this means that if you choose to structure your franchise business as a partnership, each partner with equity in the company will be required to sign a Personal Guaranty. This legally binds each partner to the terms of the Franchise Agreement, making them personally responsible for the franchise's debts and obligations. It is important for all partners to fully understand the implications of signing a Personal Guaranty, as their personal assets could be at risk if the franchise fails to meet its financial obligations.

In community or marital property states, the spouse of a partner may also be required to sign the Personal Guaranty. This further expands the scope of personal liability and ensures that community property assets are also potentially at risk. Prospective franchisees should consult with legal and financial advisors to fully understand the risks and obligations associated with signing a Personal Guaranty, especially in the context of a partnership or in community property states. This will help ensure that all partners are aware of their responsibilities and potential liabilities before entering into the Exit Franchise Agreement.