Does the termination or expiration of the Franchise Agreement affect the Gold Star Personal Guaranty?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
This Personal Guaranty remains in full force and effect until all obligations arising out of and pursuant to the Franchise Agreement and any other agreement between Franchisor and Company (including, but not limited to monetary obligations), including all renewals and extensions thereof, are fully paid and satisfied, notwithstanding the termination or expiration of the relationship set forth in the Franchise Agreement or any other agreement between Franchisor and the Company.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Personal Guaranty remains in effect even after the termination or expiration of the Franchise Agreement. This means that the guarantor's obligations to Gold Star continue until all financial and other obligations related to the Franchise Agreement are fully satisfied. This includes any renewals or extensions of the agreement.
For a prospective Gold Star franchisee, this implies a significant long-term commitment. Even if the franchise relationship ends, the personal guarantor remains liable for any outstanding debts or unfulfilled obligations. This could include unpaid franchise fees, outstanding vendor payments, or any other financial responsibilities outlined in the Franchise Agreement.
This provision is designed to protect Gold Star from financial losses in case the franchisee's business fails or the franchisee breaches the agreement. The guarantor essentially acts as a safeguard, ensuring that Gold Star receives all payments and performance due, regardless of the status of the franchise. Franchisees should carefully consider the implications of the Personal Guaranty and ensure they fully understand their potential liabilities before signing the Franchise Agreement.