If the Hydrodog franchisee is a Business Entity, must the owners personally guarantee the obligations under the Franchise Agreement?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a Business Entity, your owners must not only personally guarantee your obligations under the Franchise Agreement, but also agree to be personally bound by, and personally liable for the breach of, every provision of the Franchise Agreement. This includes both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities. The form of "Principal Owner's Guaranty" is attached as Exhibit "B" to the Franchise Agreement. We require you to complete a "Principal Owner's Statement" in the form attached as Exhibit "D," which describes all of your owners and their interests in you. You are required to identify one of your owners as having authority to communicate with us and enter into agreements with us on your behalf. We do not require the spouses of any owners to sign a Principal Owner's Guaranty.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 34–35)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if the franchisee is a Business Entity, the owners must personally guarantee the obligations under the Franchise Agreement. This means that the owners are not only guaranteeing the financial obligations, but also agreeing to be personally bound by, and personally liable for, any breach of the Franchise Agreement. This includes both monetary obligations and the responsibility to take or not take specific actions related to the Hydrodog business.
The FDD specifies that the personal guarantee extends to every provision of the Franchise Agreement. The form of this guarantee, called the "Principal Owner's Guaranty," is included as Exhibit "B" to the Franchise Agreement. Hydrodog also requires franchisees to complete a "Principal Owner's Statement," attached as Exhibit "D," which identifies all owners and their respective ownership interests in the business entity.
Hydrodog requires the franchisee to designate one owner who has the authority to communicate and enter into agreements with Hydrodog on behalf of the business. However, Hydrodog does not require spouses of the owners to sign the Principal Owner's Guaranty. This requirement ensures that Hydrodog can seek recourse directly from the owners' personal assets if the business entity fails to meet its obligations under the Franchise Agreement.