Legal Question in Business Law in Illinois

Personal Guarantee
My partner and I are going to be starting a new franchise. He has the majority of financial backing for the deal. We are both investing the same liquid cash, I will be the operator/owner, while he will be strictly an investing owner. I will be paid a salary for hours worked. We are going to be 50/50 partners on all dividends. Question is, since he will most likely be asked to sign a personal guarantee for the lease space (and/or loan), what should his compensation be for that ''risk''? Should there be a sub-lease through the business? Through his other personal real estate company? A percentage of sales? A higher stake in ownership? I have never really heard of compensation for risk either on a personal guarantee or for using ones other assets as collateral. Thanks

Asked on 9/25/08, 10:11 pm

Thomas Moens Moens Law Offices, Chartered

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Re: Personal Guarantee

The two of you can agree on any terms you like. You may want to consult with an attorney to get your agreement in writing to prevent problems later.

Answered on 10/07/08, 5:03 pm

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