Who must execute a Personal Guaranty for a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the execution of this Agreement and upon each Transfer of an interest in this franchise or in FRANCHISEE, all Principals of FRANCHISEE shall execute a Personal Guaranty in substantially the form of Exhibit C attached hereto, personally guaranteeing, jointly and severally with all other guarantors, the full payment of all monies due and owing and performance
of all FRANCHISEE's other obligations hereunder, and undertake to be bound by Sections 11, 12 and 13 of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if the franchisee is a partnership, limited liability company, or corporation, all Principals of the franchisee must execute a Personal Guaranty. This guaranty ensures the full payment of all monies due and owing, as well as the performance of all the franchisee's other obligations under the Franchise Agreement. The Personal Guaranty must be in substantially the form of Exhibit C attached to the agreement.
In practical terms, this means that if you are setting up a business entity (like an LLC or corporation) to operate your Gold Star franchise, all individuals considered 'Principals' (owners, partners, members, shareholders, etc.) will have to personally guarantee the financial obligations of the franchise. This is a common practice in franchising, as it provides the franchisor with additional security that the franchise's debts and other obligations will be met.
The Personal Guaranty makes each guarantor jointly and severally liable with all other guarantors. This means that each person who signs the guaranty is responsible for the entire debt and obligations of the franchise, not just a portion of it. If the Gold Star franchisee fails to pay or perform as required, Gold Star can pursue any or all of the guarantors for the full amount owed. This is a significant personal financial risk for the Principals, as their personal assets could be at stake if the franchise fails.
Gold Star also requires that upon the execution of the Franchise Agreement, upon each transfer of an interest in the franchise or in the franchisee, and at any other time upon Gold Star's request, the franchisee must furnish Gold Star with a certified list of all its Principals, showing the percentage interest of each, and a list of all officers, managers, and directors. A copy of the Certified Listing of all Partners/Members/Shareholders/Other Holders form to be used for this purpose is attached to the Franchise Agreement as Exhibit D.