Does the Spray Net Personal Guaranty apply to agreements between the franchisee and the franchisor's affiliates?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the grant by Franchisor to the Franchisee as herein provided, each of you hereby agree, in consideration of benefits received and to be received by each of you, jointly and severally, and for yourselves, your heirs, legal representatives and assigns, to be firmly bound by all of the terms, provisions and conditions of the foregoing SPRAY-NET Franchise Agreement, and any other agreement between Franchisee and Franchisor and/or its affiliates, and do hereby unconditionally guarantee the full and timely performance by Franchisee of each and every obligation of Franchisee under the aforesaid Franchise Agreement or other agreement between Franchisor and Franchisee, including, without limitation: (i) any indebtedness of Franchisee arising under or by virtue of the aforesaid Franchise Agreement; (ii) the prohibition of any change in the percentage of Franchisee owned, directly or indirectly, by any person, without first obtaining the written consent of Franchisor prior to said proposed transfer as set forth in the Franchise Agreement; (iii) those obligations related to confidentiality, non-disclosure and indemnification; and (iv) the in-term and post-term covenants against competition, as well as all other restrictive covenants set forth in the Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the Personal Guaranty extends to agreements between the franchisee and Spray Net's affiliates. Specifically, the personal guarantors agree to be bound by the terms of the Spray Net Franchise Agreement and any other agreement between the franchisee and Spray Net and/or its affiliates. This means that the personal guarantors are responsible for the franchisee's obligations not only to Spray Net itself but also to any of its affiliated companies.
This has significant implications for prospective Spray Net franchisees. Individuals signing the Personal Guaranty (typically owners, principals, shareholders, managers, partners, and their spouses) must understand that their personal assets are at risk not only for the franchisee's direct obligations to Spray Net but also for any obligations the franchisee may incur with Spray Net's affiliates. This could include debts, liabilities, or other responsibilities arising from agreements related to supplies, services, or other business dealings.
For example, if a Spray Net franchisee enters into a supply agreement with an affiliate of Spray Net and fails to pay, the personal guarantors would be liable for that debt. Similarly, if the franchisee breaches a service agreement with a Spray Net affiliate, the personal guarantors could be responsible for any resulting damages. Therefore, it is crucial for potential franchisees and their personal guarantors to carefully review all agreements, including those with Spray Net's affiliates, and fully understand the potential liabilities before signing the Franchise Agreement and Personal Guaranty.
This type of broad guaranty is not uncommon in franchising, as franchisors often want to ensure that all obligations related to the franchise are fully secured. However, the scope of the guaranty, including its extension to affiliates, can vary. Prospective Spray Net franchisees should seek legal counsel to fully understand the extent of their personal liability under the Personal Guaranty and any related agreements.