Who is required to sign the personal guaranty for a Pump It Up franchise?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
ective franchisee.
If you are an Entity, your owners and their spouses must sign the personal guaranty attached to the Franchise Agreement, agreeing to be personally bound by the provisions of such Franchise Agreement.
Market and Competition
We are part of the children's recreation, amusement, and entertainment industry. Our principal targeted customers are children under the age of 18. We also are an attractive venue for organizations including after-school programs, day care facilities, and youth sporting groups.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATIONS OF THE FRANCHISED BUSINESS (FDD pages 46–47)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, if the franchisee is an entity, the owners and their spouses must sign a personal guaranty attached to the Franchise Agreement. This means they agree to be personally bound by the provisions of the Franchise Agreement. Additionally, any owner of a 5% or more interest in the franchised Pump It Up Business must sign a personal guaranty undertaking to be bound by the financial provisions of the Franchise Agreement. The specific form of guaranty that the owners and their spouses must sign is included as Exhibit 5 to the Franchise Agreement.
This requirement is a standard practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the owners if the franchise entity fails to meet its financial obligations. The personal guaranty essentially makes the owners personally liable for the debts and obligations of the franchise. This is particularly important for new franchisees who may not have a long track record of business success.
For a prospective Pump It Up franchisee, this means that if you own the franchise through a corporation or LLC, you and your spouse will likely need to sign a personal guaranty. This is a significant commitment, as it puts your personal assets at risk. It is crucial to carefully review the Franchise Agreement and the personal guaranty with an attorney to fully understand the implications before signing. Franchisees should also consider the financial stability of their business and ensure they have adequate insurance coverage to mitigate potential risks.
Furthermore, if ownership changes occur, such as a transfer of the franchise, the proposed transferee, if an entity, must complete Exhibit 4 and all individuals identified in Section 14.C must sign the guaranty attached as Exhibit 5. Even after a transfer, the original franchisee and their owners may be required to sign a written guaranty to remain liable for obligations incurred before the transfer date, adding another layer of financial responsibility.