What is the purpose of the Guaranty in the Exit franchise offering?

According to Exit's 2025 Franchise Disclosure Document, if the franchisee is a corporation, partnership, or limited liability company, all equity holders in the company must execute a Personal Guaranty of the Franchise Agreement. In community or marital property states, the franchisee's spouse may also be required to sign the Personal Guaranty. This ensures that individuals behind the business entity are personally liable for the franchise's obligations. This requirement is common in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract.

The Guaranty is binding on the guarantor and their successors, remaining effective regardless of the Franchise Agreement's validity or any leniency in collecting dues. It covers situations like bankruptcy or legal defenses the franchisee might have. Exit Realty Upper Midwest, the subfranchisor, isn't obligated to first seek payment from the franchisee or their assets before enforcing the Guaranty.

The guarantor also agrees to cover all legal and collection costs Exit incurs while trying to get payments or enforce rights under the Franchise Agreement or Guaranty. The document explicitly states that this Guaranty is for both performance and payment, not just collection, meaning Exit can pursue the guarantor directly if the franchisee fails to meet their obligations. This protects Exit from losses due to franchisee non-compliance or financial instability.