Where is the 'Guaranty and Assumption of Obligations' attached in the Remax FDD?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
You, or if you are a corporation, partnership, limited liability company or other business entity, each of your owners, will not only be required to personally guarantee your obligations under the Franchise Agreement but must also agree to be personally bound by, and personally liable for the breach of, every provision of the Franchise Agreement, including monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities. If you are a corporation, partnership, limited liability company or other business entity, and you, in turn, are owned by another business entity or entities, each owner of that business entity or those business entities must also agree to be personally bound by, and personally liable for the breach of, every provision of the Franchise Agreement, including monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities. This "Guaranty and Assumption of Obligations" is attached to the Franchise Agreement, which is Exhibit A to this disclosure document.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 80–81)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the 'Guaranty and Assumption of Obligations' is attached to the Franchise Agreement. The document specifies that the Franchise Agreement itself is included as Exhibit A to the FDD. This means that prospective Remax franchisees can find the guaranty document as part of Exhibit A within the FDD.
This requirement for a personal guarantee is a standard practice in franchising, especially for franchisees operating under a corporate entity. Remax requires that all owners of the franchise business, including owners of parent entities, must personally guarantee the obligations under the Franchise Agreement. This ensures that Remax has recourse to the personal assets of the owners in case of a breach of contract or financial obligations.
For a prospective franchisee, this means that they are personally liable for the debts and obligations of the franchise, even if the franchise is operated through a corporation or LLC. This is a significant risk to consider, as personal assets could be at stake if the franchise fails or breaches the agreement. It is important for potential franchisees to carefully review the 'Guaranty and Assumption of Obligations' document and understand the full extent of their personal liability before signing the Franchise Agreement.