Personal guarantee

Nearly every franchise agreement and SBA loan requires one. Forming an LLC does not shield you: the guarantee pierces it by contract. If the unit fails owing royalties, rent, or loan balances, creditors can pursue your personal assets. Spouses are often asked to sign too, which puts jointly-held assets in reach.

This is why franchise failure so often ends in personal bankruptcy rather than a quiet business closure — and why the SBA charge-off record understates the human cost: a charged-off loan usually means a family that paid the rest.