When transferring a Monicals Pizza franchise, can the franchisor require the franchisee to guarantee the transferee's performance of the new franchise agreement?

According to Monicals Pizza's 2025 Franchise Disclosure Document, when transferring a franchise, Monicals Pizza may require the franchisee to guarantee the full performance of the new franchise agreement by the transferee. This means that the original franchisee could remain liable for the financial and operational obligations of the business even after it has been sold to a new owner, if Monicals Pizza requires this guarantee.

This requirement is outlined as one of the conditions that must be met for a transfer to be approved. Other conditions include the transferee meeting Monicals Pizza's standards, executing the current franchise agreement, and paying a transfer fee. The agreement the transferee executes may have different Royalty Fee and Marketing Fund Contribution rates and other material provisions. The transferee must also execute a General Release, releasing any and all claims against Monicals Pizza.

For a prospective Monicals Pizza franchisee looking to sell their business in the future, this is a critical point to consider. The franchisee should be aware that Monicals Pizza has the right to demand a guarantee, which could expose the seller to ongoing risk. It is important to discuss this potential requirement with Monicals Pizza during the transfer process and to fully understand the implications of providing such a guarantee.