Does Punch King Fitness require a Personal Guaranty, as indicated by the exhibits?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
PERSONAL GUARANTY
IN CONSIDERATION for, and as an inducement for Punch King Fitness, Inc. (Franchisor) to enter into a Punch King Fitness franchise agreement and any powers of attorney and other instruments dated concurrently herewith (collectively the Franchise Documents) between Franchisor and the business entity identified below (Franchisee), the undersigned (Guarantors) hereby jointly and severally guarantee to Franchisor, and to Franchisor's successors and assigns (a) the timely payment of all Royalty Fees, late fees, interest charges, and all other fees and charges provided for under the Franchise Agreement; and (b) the timely performance of all of the provisions of the Franchise Documents for and during the term thereof (including all renewals thereof, if any). Guarantors further specifically agree to be individually bound by all covenants, obligations, and commitments of Franchisee contained in each of the Franchise Documents to the same extent as if each of the Guarantors had individually executed the same as Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, a Personal Guaranty is required. The document includes a section titled "PERSONAL GUARANTY" which outlines the terms under which the guarantors (franchisees) guarantee the obligations of the Franchisee to Punch King Fitness.
The Personal Guaranty stipulates that the guarantors jointly and severally guarantee the timely payment of all Royalty Fees, late fees, interest charges, and all other fees and charges under the Franchise Agreement. They also guarantee the timely performance of all provisions within the Franchise Documents for the entire term, including renewals. This means that the personal assets of the guarantors are at risk if the franchised business fails to meet its financial or contractual obligations to Punch King Fitness.
Furthermore, the guarantors agree to be individually bound by all covenants, obligations, and commitments of the Franchisee as if they had individually executed the Franchise Documents. This underscores the comprehensive nature of the guarantee, ensuring that Punch King Fitness has recourse to the personal assets of the guarantors in case of default by the Franchisee. Prospective franchisees should carefully review the terms of the Personal Guaranty with legal counsel to fully understand their obligations and potential liabilities.