Franchise Glossary
Personal Guarantee
What is Personal Guarantee in franchising?
A legal commitment in which the franchisee, and often their spouse, pledges personal assets as collateral for a business obligation, most commonly an SBA loan or commercial lease. Personal guarantees are standard in franchising and effectively remove the liability shield of the business entity for the specific obligation guaranteed. Understanding exactly what is personally guaranteed in your franchise deal is an important part of legal review before signing.