Are the covenants, agreements, and obligations assumed by the Kidokinetics franchisee considered joint and several?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- E. Guarantors agree to personally, and jointly and severally, guaranty Franchisee's obligations and covenants under this Agreement and to be bound by each provision as though each were the Franchisee.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to the 2024 Kidokinetics Franchise Disclosure Document, the obligations of the franchisee may be jointly and severally guaranteed if there are guarantors to the agreement. Specifically, if there are guarantors to the software agreement between Kidokinetics and the franchisee, then those guarantors agree to be personally responsible for the franchisee's obligations.
This means that Kidokinetics can pursue any one guarantor, or all of them, for the full amount of the franchisee's debt or obligations under the agreement. This is a significant risk for anyone acting as a guarantor, as they are taking on full personal liability for the franchisee's performance. It is common practice in franchising to have the franchisee and their spouse, or other business partners, act as guarantors to ensure the franchisor has recourse in case of default.
Prospective Kidokinetics franchisees should carefully consider the implications of this joint and several liability, especially if they are entering into the franchise agreement with partners or if they have others co-signing or guaranteeing their obligations. They should seek legal and financial advice to fully understand the risks involved before signing any agreements.