If a Remax franchisee is owned by another business entity, what obligations do the owners of that entity have?
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, if a franchisee is a business entity such as a corporation, partnership, or LLC, the owners of that entity have specific obligations. These owners must personally guarantee the franchisee's obligations under the Franchise Agreement. This means they agree to be personally bound by and liable for any breaches of the agreement. This includes both monetary obligations, such as franchise fees or other payments, and non-monetary obligations, such as adhering to Remax's operational standards and brand guidelines.
Furthermore, this personal liability extends beyond the immediate owners of the franchisee entity. If the franchisee entity is, in turn, owned by another business entity or entities, the owners of those entities must also agree to be personally bound by and liable for any breaches of the Franchise Agreement. This creates a multi-layered guarantee, ensuring that individuals at various levels of ownership are accountable for the franchisee's compliance with the agreement.
This requirement is formalized through a "Guaranty and Assumption of Obligations" document, which is attached as an exhibit to the Franchise Agreement. This document legally binds the owners to the terms of the agreement, reinforcing their personal responsibility for the franchisee's performance and adherence to Remax's standards. This is a common practice in franchising to ensure that there is recourse beyond the business entity itself, providing the franchisor with added security and accountability.