What guarantee must holders of interest in the Controlled Entity provide to Monicals Pizza's Franchisor?

According to the 2025 FDD, all holders of a legal or beneficial interest of five percent (5%) or greater in a Monicals Pizza franchise are required to execute and deliver to the franchisor an Unlimited Guaranty and Assumption of Obligations. This agreement, attached as Exhibit 3 to the franchise agreement, ensures that these holders assume and fulfill all of the franchisee's obligations under the agreement and are personally liable for them.

In practical terms, this means that individuals with a significant financial stake in the Monicals Pizza franchise (5% or more) must provide a personal guarantee to the franchisor. This guarantee makes them personally responsible for the franchise's debts and obligations, providing the franchisor with an additional layer of security. If the franchise fails to meet its financial or contractual obligations, the franchisor can pursue these individuals directly to recover any losses.

This requirement is a common practice in franchising, as it protects the franchisor from potential losses due to franchisee default. By requiring a personal guarantee, Monicals Pizza ensures that those with a vested interest in the franchise's success are also personally accountable for its performance. Prospective franchisees should carefully review Exhibit 3 and understand the full extent of their personal liability before signing the franchise agreement. It is advisable to seek legal counsel to fully understand the implications of this guarantee.