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I am in the process of opening a franchise with a business

Customer Question
partner and the franchise owner...
I am in the process of opening a franchise with a business partner and the franchise owner just sent us a "personal guarantee" agreement. He initially stated that it was a personal guarantee to protect him in case we try to refuse royalty payments but after reading it, it reads a lot more like it's circumventing the protection offered by an LLC more so than anything, before I sign it I would like to get the opinion of someone who may know more about these things.
Agreement can be viewed here: https://drive.google.com/file/d/0B0z0ROUVsvOpaGJRemZjd2xsWWc/view?usp=sharing
I would be open to a personal guarantee on franchise royalties per say, but I am not open to circumventing LLC protection for the business.
Submitted: 2 years ago.Category: Business Law
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Customer reply replied 2 years ago
Attached is the PDF if the google doc link doesn't work for you.
Answered in 4 minutes by:
9/17/2015
Business Lawyer: Barrister, Attorney replied 2 years ago
Barrister
Barrister, Attorney
Category: Business Law
Satisfied Customers: 38,716
Experience: 17 years practicing attorney, JD, BA, MBA
Verified

Hello and welcome! My name is ***** ***** I will try my level best to helpwith your situation or get you to someone who can.

.

You are correct in that this is a personal guarantee this entirely defeats the purpose of having an LLC enter into the agreement because you would be agreeing to be completely personally liable, in addition to the LLC being liable here. So basically the worst of both worlds.

.

If the LLC were to default on any obligation to the owner, then he can come after the LLC assets, or either or both of your personal assets.

.

.

thanks

Barrister

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Customer reply replied 2 years ago
How much would you charge to draft a new agreement that solely covers the responsibilities to the franchise in terms of royalties and fees and keep the LLC coverage?
Business Lawyer: Barrister, Attorney replied 2 years ago

Unfortunately, I can’t draft legal documents for customers as that could imply an attorney-client relationship which I am prohibited from entering into under my independent contractor agreement with JustAnswer. You would need to contact a local attorney, probably a real estate or landlord tenant attorney could handle this, and have them draft up a new proposed agreement.

.

But this would be the case by default (i.e. only the LLC is liable) unless you agree to sign the personal guarantee....so a new agreement really wouldn't be necessary to confirm what is already the default scenario.

.

.

thanks

Barrister

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Barrister
Barrister
Barrister, Attorney
Category: Business Law
Satisfied Customers: 38,716
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Experience: 17 years practicing attorney, JD, BA, MBA

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