Besides the franchisee, who else is required to guaranty the Loan Documents for a Management Recruiters loan?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
If you qualify for a loan, you will sign a Promissory Note and Security Agreement (see FDD Exhibit A). Together, the Note and Security Agreement are referred to as the "Loan Documents." No one other than the Franchisee must guaranty the Loan Documents.
Source: Item 10 — FINANCING (FDD pages 31–34)
What This Means (2024 FDD)
According to Management Recruiters's 2024 Franchise Disclosure Document, when a franchisee qualifies for a loan from HQ Financial Corporation, Management Recruiters's affiliate, only the franchisee is required to guaranty the Loan Documents. The Loan Documents consist of a Promissory Note and Security Agreement.
This means that Management Recruiters does not require any additional guarantors, such as family members or business partners, to secure the loan beyond the franchisee themselves. This can be a significant benefit for prospective franchisees who may not have other individuals willing or able to guarantee their financial obligations.
However, it is important to note that the franchisee's personal assets and the Management Recruiters franchise itself will likely be used as collateral to secure the loan. Therefore, in the event of a default, Management Recruiters has the right to exercise its rights to the collateral pledged for the loan and demanding payment from guarantors. Breaches of the Loan Documents include any un-cured default by you under the Franchise Agreement, or the sale, transfer, termination or non-renewal of any Franchise Agreement you have with us.