What is the role of the Guaranty and Assumption of Obligations form in the transfer of a Focalpoint Coaching franchise?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Despite Subsection 12.C above, if Franchisee is fully complying with this Agreement, Franchisee may transfer this Agreement to a corporation or limited liability company which conducts no business other than the Franchised Business and, if applicable, other FocalPoint Franchised Businesses, in which Franchisee maintains management control, and of which Franchisee owns and controls one hundred percent (100%) of the equity and voting power of all issued and outstanding ownership interests, provided that all of the Franchised Business' assets are owned, and the Franchised Business' business is conducted, only by that single corporation or limited liability company. The corporation or limited liability company must expressly assume all of Franchisee's obligations under this Agreement. Transfers of ownership interests in the corporation or limited liability company are subject to the conditions of Subsection 12.C above that otherwise apply to non-controlling transfers. Franchisee agrees to remain personally liable under this Agreement as if the transfer to the corporation or limited liability company did not occur.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
Based on the 2025 Focalpoint Coaching Franchise Disclosure Document, if a franchisee transfers their franchise to a corporation or limited liability company, that entity must expressly assume all of the franchisee's obligations under the Franchise Agreement. This requirement is detailed in Subsection 12.D. The original franchisee, however, remains personally liable under the agreement even after the transfer. This means that even though the business is now owned by a corporation or LLC, the original franchisee is still on the hook for fulfilling the terms of the agreement.
This clause protects Focalpoint Coaching by ensuring that the original franchisee doesn't simply walk away from their responsibilities by transferring the franchise to a new entity. It provides an extra layer of security for the franchisor, as they have recourse to both the corporation/LLC and the original franchisee if there are any breaches of the agreement. For a franchisee, this means that they cannot escape their obligations by incorporating; they remain personally liable.
This requirement is fairly standard in franchising. Franchisors want to ensure that franchisees are fully committed to the business and that they don't try to avoid their obligations by transferring the franchise to an entity with limited assets. The personal guarantee provides that assurance. A prospective Focalpoint Coaching franchisee should carefully consider this personal liability before deciding to transfer their franchise to a corporation or LLC.