What is the purpose of the Personal Guaranty in the Nothing Bundt Cakes Franchise Agreement?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned persons (individually and collectively "you") hereby represent to NBC Franchisor LLC ("Franchisor") that you are either: (a) the general partner of [insert here the name of the franchisee entity] ("Franchisee"); (b) all of the shareholders, partners, limited partners, or members in the Franchisee; or (c) the spouse of Franchisee or Franchisee's owner whose financials were required in order for Franchisee to qualify for a Nothing Bundt Cakes® franchised bakery (a "Bakery"). In consideration of the grant by Franchisor to the Franchisee of a franchise pursuant to the franchise agreement to which this Personal Guaranty is attached (the "Franchise Agreement"), each of you hereby agree, in consideration of benefits received and to be received by each of you, jointly and severally, and for yourselves, your heirs, legal representatives and assigns, to be firmly bound by all of the terms, provisions and conditions of the foregoing Franchise Agreement, and any other agreement between Franchisee and Franchisor and/or its affiliates, and do hereby unconditionally guarantee the full and timely performance by Franchisee of each and every obligation of Franchisee under the aforesaid Franchise Agreement or other agreement between Franchisor and Franchisee, including, without limitation, any indebtedness to Franchisor or its affiliates of Franchisee arising under or by virtue of the aforesaid Franchise Agreement and that you (jointly and individually) will not permit or cause any change in the percentage of Franchisee owned, directly or indirectly, by any person, without first obtaining the written consent of Franchisor prior to said proposed transfer, which consent must not be unreasonably withheld, and without first paying or causing to be paid to Franchisor the transfer fee provided for in said Franchise Agreement, if applicable, and without otherwise complying with the transfer provisions of the foregoing Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
According to the 2025 Nothing Bundt Cakes Franchise Disclosure Document, the Personal Guaranty ensures that the franchisee fulfills all obligations under the Franchise Agreement. The Personal Guaranty is an agreement signed by individuals associated with the franchisee entity, such as general partners, shareholders, or spouses whose financials were used to qualify for the franchise. By signing, these individuals agree to be bound by the terms of the Franchise Agreement and any other agreements between the franchisee and Nothing Bundt Cakes.
The Personal Guaranty unconditionally guarantees the full and timely performance of every obligation of the franchisee. This includes any debts owed to Nothing Bundt Cakes or its affiliates that arise from the Franchise Agreement. The guarantors also agree not to change the ownership percentage of the franchisee without prior written consent from Nothing Bundt Cakes. This consent must not be unreasonably withheld, and any applicable transfer fees must be paid, along with compliance with the transfer provisions in the Franchise Agreement.
For a prospective Nothing Bundt Cakes franchisee, the Personal Guaranty means that they, along with their partners or spouse, are personally liable for the bakery's financial and operational obligations. This is a standard practice in franchising, as it provides the franchisor with additional security that the franchisee will adhere to the agreement. The franchisee should carefully consider the implications of signing a Personal Guaranty, as it puts their personal assets at risk if the business fails to meet its obligations. Franchisees should seek legal counsel to fully understand the terms and conditions of the Personal Guaranty before signing the Franchise Agreement.