Must the proposed transferee of an Exit franchise sign a Guaranty of the Agreement?

According to Exit's 2025 Franchise Disclosure Document, a proposed transferee must sign the Subfranchisor's current form of Guaranty of the Agreement as a condition of the transfer. Specifically, the FDD states that the Subfranchisor will not unreasonably withhold consent to any proposed transfer, provided that the franchisee and/or the transferee comply with certain conditions. One of these conditions is that "(H) The proposed transferee shall sign Subfranchisor's then current form of Guaranty of this Agreement".

This requirement ensures that the new franchisee (transferee) is legally bound to uphold the terms and conditions of the franchise agreement. By signing the Guaranty, the transferee agrees to be responsible for the obligations outlined in the original agreement, providing the Subfranchisor with a legal recourse should the transferee fail to meet these obligations. This is a standard practice in franchising to protect the franchisor's interests and maintain consistency across the franchise system.

For a prospective Exit franchisee, this means that if they ever decide to sell or transfer their franchise, the person or entity buying the franchise will need to sign a Guaranty. This could impact the pool of potential buyers, as some individuals or entities may be unwilling to take on this level of legal responsibility. It is important for franchisees to understand this requirement and discuss it with any potential transferees early in the transfer process.