If the Fly To Fit franchisee is an entity, what must the franchisee do regarding a personal guaranty?

According to Fly To Fit's 2024 Franchise Disclosure Document, if the franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Fly To Fit. This guaranty must be in the form of Attachment 3, as specified in the FDD.

This requirement means that the franchisor, Fly To Fit, seeks assurance that the financial and contractual obligations of the franchise agreement will be met, even if the franchisee is a business entity. By requiring a personal guarantee from each owner, Fly To Fit ensures that individuals with a vested interest in the franchise's success are personally liable for the business's debts and obligations.

For a prospective Fly To Fit franchisee, this implies that forming a corporation or LLC does not shield them entirely from personal liability. They, along with all other owners, must be willing to put their personal assets at risk to guarantee the franchise's performance. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and encourages franchisees to manage their businesses responsibly. Franchisees should carefully review Attachment 3 to fully understand the scope and terms of the personal guaranty before signing the franchise agreement.