Does Mr. Sandless require a personal guaranty of shareholders, partners, members, and managers?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge that all partners in a limited partnership, shareholders in a corporate franchisee, or members and managers in a limited liability company franchisee are obligated to execute a Guaranty
Agreement whereunder each agrees to personally abide by all of the terms and conditions of this Agreement, and guarantees to us your performance of this Agreement and your financial obligations. Unless all such partners, shareholders, or members and managers execute such Guaranty Agreement concurrently herewith, this Agreement shall, at our option, become null and void and confer no rights upon you nor any partner, shareholder, member or manager. All guarantors shall be jointly and severally liable for the performance of all of the terms, covenants and conditions hereof.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, if the franchisee is a corporation or limited liability company, all shareholders, members, and managers must sign a Guaranty Agreement. This agreement means they personally agree to be bound by the terms of the Franchise Agreement and guarantee the franchisee's performance of all obligations under the agreement. Mr. Sandless requires this to ensure that individuals with a vested interest in the franchise are personally liable for its performance.
This requirement has significant implications for prospective Mr. Sandless franchisees who plan to operate under a corporate or LLC structure. It means that the personal assets of the shareholders, members, and managers are at risk if the franchise fails to meet its obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and encourages those in control of the franchise to actively manage and ensure its success.
The FDD also states that unless all partners, shareholders, or members and managers execute the Guaranty Agreement concurrently with the franchise agreement, Mr. Sandless has the option to void the agreement. This underscores the importance Mr. Sandless places on securing these personal guarantees. All guarantors are jointly and severally liable for the performance of all terms, covenants, and conditions outlined in the agreement.
Therefore, prospective franchisees should carefully consider the implications of this personal guarantee and ensure that all relevant parties are willing to accept this responsibility before moving forward with a Mr. Sandless franchise. It is advisable to consult with legal and financial advisors to fully understand the risks and obligations associated with signing a Guaranty Agreement.