Under the Pearce Bespoke franchise agreement, are the owners/shareholders jointly and severally liable under the Personal Guaranty?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of, and as an inducement to, the execution of that certain franchise agreement of even date herewith ("Franchise Agreement") by the parties listed as Franchisor and Franchisee in the Franchise Agreement, the undersigned hereby personally and unconditionally, jointly and severally: guaranties to Franchisor and its successors and assigns, for the Term of the Franchise Agreement and, including any renewal thereof, as provided in the Franchise Agreement, that Franchisee shall punctually pay and perform each and every undertaking, agreement and covenant stated in the Agreement and any documents, agreements, and instruments signed with or in connection with the Franchise Agreement (collectively, the "Franchise Documents"); and (2) agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Franchise Documents applicable to the owners of Franchisee.
The undersigned waives:
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- acceptance and notice of acceptance by Franchisor of the foregoing undertakings.
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- notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed.
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- protest and notice of default to any party with respect to the indebtedness of non-performance of any obligations hereby guaranteed.
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- any right the undersigned may have to require that an action be brought against Franchisee or any other person as a condition of liability; and
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- any and all other notices and legal or equitable defenses to which the undersigned may be entitled.
The undersigned consents and agrees that:
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- the undersigned's direct and immediate liability under this Guaranty shall be joint and several with all signatories to this and similar guaranties of Franchisee's obligations.
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- the undersigned shall render any payment or performance required under the Franchise Agreement upon demand if Franchisee fail
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the owners/shareholders are jointly and severally liable under the Personal Guaranty. This means that each individual signing the Personal Guaranty is responsible for the entire debt and obligations of the Pearce Bespoke franchisee. Pearce Bespoke Franchising, LLC can pursue any one or all of the guarantors for the full amount owed, regardless of their individual ownership stake. This is detailed in Attachment B - Personal Guaranty of Owner/Shareholder.
This arrangement protects Pearce Bespoke by ensuring that there are multiple parties responsible for the financial obligations of the franchise. If the franchisee entity fails to meet its obligations, Pearce Bespoke can seek recourse from any or all of the personal guarantors. The personal guarantors waive several rights, including requiring Pearce Bespoke to first pursue action against the franchisee before seeking payment from them.
For a prospective Pearce Bespoke franchisee, this means that signing a Personal Guaranty carries significant financial risk. Each owner/shareholder should fully understand the implications of joint and several liability and be confident in the franchisee's ability to meet its financial obligations. It is advisable to seek legal counsel to fully understand the risks before signing the Franchise Agreement and Personal Guaranty.