Under what circumstances might the spouse of an Exit franchisee be required to sign the Personal Guaranty?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
As a Franchisee, you, or if you are an entity, an officer, member, director, partner or other person named as the real estate broker of record, must devote full time and best efforts to the Franchise business. If the Franchisee is operating as a corporation, partnership or limited liability company, you and all other equity holders in the company must execute a Personal Guaranty of the Franchise Agreement. In addition, in community or marital property states, your spouse may be required to sign the Personal Guaranty.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 27)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if the franchisee is operating in a community or marital property state, the franchisee's spouse may be required to sign the Personal Guaranty. This requirement is in addition to the franchisee themselves, or if the franchisee is an entity, the officer, member, director, partner or other person named as the real estate broker of record, who must devote full time and best efforts to the franchise business.
This means that in certain states recognized as community or marital property states, the franchisor, Exit, may require the spouse to also be held personally responsible for the financial and legal obligations of the franchise agreement. This is a significant consideration for prospective franchisees, as it extends the liability beyond the franchisee to their spouse.
Prospective franchisees should carefully review the franchise agreement and consult with a legal and financial advisor to understand the full implications of the Personal Guaranty, especially if they reside in a community or marital property state. They should also inquire with Exit about which states are considered community or marital property states for the purposes of this requirement.