For a Pump It Up franchisee that is an entity, who must execute a personal guaranty?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are an Entity, each of your owners who hold more than 5% of ownership in you at any point during the term of this Agreement, along with each of their spouses, must
sign a guaranty in the form we prescribe undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between you and us. Our current form of guaranty is attached as Exhibit 5.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, if a franchisee is an entity (corporation, LLC, or partnership), each owner holding more than 5% ownership in the entity at any point during the term of the Franchise Agreement, along with their spouses, must sign a personal guaranty. This guaranty, in the form prescribed by Pump It Up and attached as Exhibit 5, makes them personally liable, jointly and severally, for all obligations under the Franchise Agreement and any related agreements between the franchisee and Pump It Up.
This requirement ensures that Pump It Up has recourse to the personal assets of the owners in case the franchisee entity fails to meet its financial or contractual obligations. The personal guaranty covers all provisions of the Franchise Agreement, meaning the guarantors are responsible for the franchisee's performance in all aspects of the business, not just monetary obligations. This is a standard practice in franchising, as it provides an additional layer of security for the franchisor.
Prospective Pump It Up franchisees should carefully review Exhibit 5, the guaranty agreement, to fully understand the scope of their personal liability. They should also consider the implications of this requirement for their personal assets and financial planning. Franchisees should also be aware that this requirement extends to their spouses, who must also sign the guaranty, further emphasizing the comprehensive nature of the obligation.