Who is required to sign the personal guarantee attached to the Franchise Agreement for a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of Your owners, beneficial owners and You and Your beneficial owners' spouses must sign the personal guarantee attached to the Franchise Agreement as Attachment C personally guaranteeing and agreeing to perform certain obligations of the Franchisee under the Franchise Agreement.
If Franchisee is a corporation, partnership, limited liability company, or other entity, or in the future become a corporation, partnership, limited liability company, or other entity, Franchisor will require Franchisee's officers, directors, shareholders, partners, members, managers, owners, and owner's spouses or domestic partners to sign the Personal Guaranty attached hereto as Attachment C.
When the Franchisee signs this Agreement, the Franchisee will designate an individual as the "Operating Principal." If the Franchisee is an individual, then the Operating Principal will be the Franchisee. The Franchisee's Operating Principal must be an individual approved by the Franchisor who (a) owns and controls or has the right to own and control (subject to conditions reasonably acceptable to us) not less than 51% of the ownership equity in the Franchisee, and (b) has the authority to bind the Franchisee regarding all operational decisions with respect to Franchisee's Southern Steer Business. The Operating Principal will be required to execute the personal guaranty attached to this Agreement as Attachment C ("Personal Guaranty")
Source: Item 15 — ITEM. 15 OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 41–42)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, several parties may be required to sign the personal guarantee attached to the Franchise Agreement. If the franchisee is an individual, they will be the Operating Principal and must sign the personal guarantee. If the franchisee is a corporation, partnership, limited liability company, or other entity, the Operating Principal, who must own and control at least 51% of the ownership equity, must sign the personal guarantee.
Furthermore, each of the franchisee's owners, beneficial owners, and their spouses must sign the personal guarantee, as detailed in Attachment C of the Franchise Agreement. This ensures that all individuals with a significant financial stake in the franchise are personally liable for the franchisee's obligations under the agreement.
This requirement is a standard practice in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract by the franchisee. Prospective Southern Steer franchisees should carefully review the personal guarantee and understand the full extent of their obligations before signing the Franchise Agreement.