franchise-personal-guarantyDrafts a Personal Guaranty binding individual principals to a corporate franchisee's obligations under a franchise agreement. Covers unconditional payment-and-performance guaranty, suretyship defense waivers, reinstatement, subordination, joint and several liability, financial disclosure covenants, and spousal consent. Use when drafting franchise guaranty a…
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name: franchise-personal-guaranty language: en description: Drafts a Personal Guaranty binding individual principals to a corporate franchisee's obligations under a franchise agreement. Covers unconditional payment-and-performance guaranty, suretyship defense waivers, reinstatement, subordination, joint and several liability, financial disclosure covenants, and spousal consent. Use when drafting franchise guaranty agreements, personal guarantees for franchise transactions, or franchisor credit enhancement documents. tags:
Drafts an enforceable personal guaranty binding individual principals to all franchisee obligations, providing maximum credit enhancement for the franchisor. Defaults to unlimited, unconditional guaranty unless the franchisor requests a cap.
Extract from uploaded documents before drafting:
| Item | Source |
|---|---|
| All obligation categories (fees, royalties, advertising, technology, training, transfer, indemnification, post-termination) | Franchise Agreement |
| Notice clauses, cure periods, renewal/extension terms | Franchise Agreement |
| Spousal consent requirement | Governing state law |
| Notarization/witnessing requirements | Governing jurisdiction |
| Enforceability of suretyship defense waivers | Governing jurisdiction case law |
| Jury waiver enforceability | Governing jurisdiction |
Community property states requiring spousal consent: AZ, CA, ID, LA, NV, NM, TX, WA, WI.
Draft all 16 sections in order:
Title PERSONAL GUARANTY (centered, bold, all caps). Include effective date, guarantor/franchisor names and addresses. Use present-tense commitment language: "does hereby unconditionally and irrevocably guarantee." State guaranty is material inducement for franchisor entering the Franchise Agreement.
WHEREAS clauses referencing Franchise Agreement with specificity (date, parties, location/territory). State guarantor's relationship to franchisee, inducement, guarantor's familiarity with franchisee's financial condition, and consideration acknowledgment transitioning to "NOW, THEREFORE..."
Enumerate all guaranteed obligation categories explicitly:
| Category | Examples |
|---|---|
| Initial fees | Franchise fee, training fees, opening costs |
| Continuing payments | Royalties, advertising fund, technology fees |
| Purchase obligations | Products, supplies, equipment from designated suppliers |
| Operational costs | Audit costs, inspection fees, underreporting fees |
| Transfer-related | Transfer fees, costs of proposed transfers |
| Breach/default | Liquidated damages, indemnification |
| Post-termination | De-identification, inventory sell-off royalties, lease obligations |
| Collection costs | Attorneys' fees, court costs |
Extend to renewals, extensions, modifications (with or without guarantor's knowledge/consent). Cover obligations accruing after default or termination.
Primary, direct, immediate obligation — guarantor treated as principal debtor. No requirement to first proceed against franchisee or exhaust remedies. Joint and several liability. Franchisor may pursue guarantor without prerequisite actions.
Draft comprehensive waivers of:
State guarantor's obligations are independent of franchisee's obligations.
Effective until all obligations indefeasibly paid in full. Automatic reinstatement if any payment rescinded, avoided, or returned (including bankruptcy preference avoidance). Continues through renewals/extensions. Survives transfer unless express written release.
Each guarantor liable for full amount. Franchisor may proceed against any guarantor without joining others. Waiver of contribution, reimbursement, and subrogation rights among guarantors until all obligations satisfied. Release of one does not affect others.
Guarantor represents: adequate financial resources independent of franchise income; has read and understands Franchise Agreement and FDD; opportunity to consult counsel; no conflicts with existing agreements; guaranty is legal, valid, and binding; all financial information true, accurate, complete with no material adverse change.
Personal financial statement at execution. Annual updates within 30 days of year-end. Updates on request (10 days' notice). Credit report authorization. Prompt notice (10 days) of: material adverse change, bankruptcy filing, judgments/liens exceeding $[threshold], defaults on material obligations.
Triggers: franchisee default | guarantor breach | guarantor bankruptcy/insolvency | assignment for benefit of creditors | material adverse change | death/incapacity | dissolution.
Remedies: immediate acceleration | full payment demand | specific performance | setoff rights | enforcement cost recovery | all legal/equitable remedies. Remedies cumulative. No waiver by delay; waivers must be written and signed.
All franchisee indebtedness to guarantor subordinated to franchisor's claims. No payments from franchisee while obligations outstanding. Payments received in violation held in trust for franchisor. Waiver of subrogation, reimbursement, and contribution until all obligations satisfied.
Consent to exclusive jurisdiction in [franchisor's preferred county/state]. Service by certified/registered mail. JURY TRIAL WAIVER in ALL CAPS, conspicuous format.
Governing state law without conflicts-of-law principles. Amendments only by written instrument signed by franchisor. No modification by course of dealing or trade usage.
Severability (modify to minimum extent or sever). Binding on heirs, executors, administrators, successors, assigns. Franchisor may assign without consent; guarantor may not. Cumulative security (supplements other guaranties). Entire agreement on subject matter.
Guarantor acknowledges: material inducement; valuable consideration; opportunity to consult counsel; voluntary execution without duress; franchise risk and potential substantial liability; adequate independent financial resources; important legal rights being waived (enumerate key waivers).
Separate signature line for each guarantor (name, signature, date, address). Separate pages if executing remotely. Include notary acknowledgment if required. Include CONSENT OF SPOUSE section with spouse signature block in community property states.