Does Marble Slab Creamery guarantee a franchisee's note or obligation?

According to Marble Slab Creamery's 2025 Franchise Disclosure Document, in the context of transferring a franchise, the franchisee and/or its owners, along with the transferee's owners, may be required to execute a continuing guaranty in favor of Marble Slab Creamery. This guaranty would cover the performance and payment obligations of the transferee (the new franchisee) to Marble Slab Creamery and its affiliates under the franchise agreement. This requirement is at Marble Slab Creamery's request.

This means that when a Marble Slab Creamery franchise is transferred to a new owner, Marble Slab Creamery can require the original franchisee and their owners to guarantee that the new franchisee will meet all financial and operational obligations. This protects Marble Slab Creamery by providing an additional layer of security, ensuring that if the new franchisee fails to perform, Marble Slab Creamery can seek recourse from the previous franchisee and their owners.

For a prospective Marble Slab Creamery franchisee, this clause highlights the importance of carefully selecting a buyer if they decide to sell their franchise. The original franchisee remains financially responsible for the new franchisee's performance if Marble Slab Creamery requests a continuing guaranty. This could have long-term financial implications for the seller, even after they have transferred ownership of the franchise. It is important to note that this requirement is not automatic but is enacted at Marble Slab Creamery's discretion.

This type of guarantee is not uncommon in franchising, as franchisors often seek to ensure the stability and performance of their franchise network. However, the specific terms and conditions of such guarantees can vary significantly between franchise systems. Therefore, prospective Marble Slab Creamery franchisees should carefully review the franchise agreement and seek legal counsel to fully understand their obligations and potential liabilities related to franchise transfers and guarantees.