When you launched your business and set up a limited liability company, you probably signed an operating agreement. Your operating agreement is essentially an agreement among the owners about how the business will be operated. Most importantly, it addresses how to...
A personal guarantee means that if your franchised business fails, the franchisor can sue you, personally, for money damages.
In the fraud-filled world of franchise sales, you must take the lead in protecting yourself against promises that the “consultant” has no intention (or ability) to keep. Read the FDD carefully and retain an experienced franchisee lawyer before you sign anything.
If you agree before you start and get the agreement written down and signed, the chances of your business surviving, along with your friendship, vastly improves.
If you are going to buy a franchise with an initial fee of $40,000 and a total initial investment of $500,000 and which would lead to your personal liability for $1,500,000, you should consult an experienced franchise attorney to review the documents and check for problems and defects that you do not have the expertise to identify and understand. It may not cost any more than that house inspector—and far more is at stake.