Personal Guarantee: Selling May Not Release You

Selling your franchise does not automatically release your personal guarantee. F45 Training’s April 1, 2026 FDD and Five Guys’ June 30, 2026 FDD preserve specified pre-transfer obligations. SBA’s 7(a) Lender Matrix separately allows a loan assumption without releasing the original borrower or guarantor. Whether your liability ends depends on your signed contracts and release documents.

There are two gates: the franchisor and the lender. The lender rule differs by SBA loan program. This is an explanation of the cited documents, not legal advice; review your own guaranty and proposed releases with a franchise attorney and your lender.

Gate	Counterparty	Default on transfer	What releases you	Source
Franchisor	F45 or Five Guys, for the agreements cited here	F45 and Five Guys preserve pre-transfer obligations; Five Guys does so in both its Franchise Agreement and Development Agreement	A release from the franchisor that expressly covers your guaranty and the obligations at issue; transfer approval alone does not establish this	F45 April 1, 2026 FDD, Item 17 and Franchise Agreement 14.B.(8); Five Guys June 30, 2026 FDD, Development Agreement VIII.B.(2)(f) and Franchise Agreement XIV.B.(2)(h)
Lender: SBA 7(a)	7(a) lender, with SBA approval where required	Assumption without release leaves the original borrower or guarantor liable	Lender release, generally requiring prior SBA approval, subject to note 21	Version 18 Lender Matrix, release and assumption rows; note 21
Lender: SBA 504	CDC other than a PCLP CDC	A claim release requires prior written SBA consent; a transfer alone is not that release	CDC release with prior written SBA consent under this provision	13 CFR 120.536(b)(4)

Gate one: the franchisor

F45: April 1, 2026 FDD

F45’s Item 17, row m, summarizes the transfer conditions under Section 14.B. of its Franchise Agreement:

“Pay all amounts due; not be in default; execute a general release (see Exhibit G); pay transfer fee; remain liable for pre-transfer obligations.”

The Franchise Agreement itself, Section 14.B.(8), states:

“The transferor will remain liable for all of its obligations to Franchisor under this Agreement incurred prior to the effective date of the transfer and must execute any and all instruments reasonably requested by Franchisor to evidence such liability;”

Item 15 also requires the current and future Key Person to sign the guaranty attached to the Franchise Agreement. The transferor-liability clause and the personal guaranty are related documents to review, not interchangeable promises. F45’s guaranty is part of the contracts attached under Item 22; see FDD Item 22 explained for how to locate those contracts.

Five Guys: June 30, 2026 FDD

Five Guys’ Item 17 transfer row for the Development Agreement, Section VIII.B.(2), says:

“Conditions include: pay all amounts due us, not otherwise be in default, sign a general release, remain liable for pre-transfer obligations and pay a transfer fee.”

Its Development Agreement, Section VIII.B.(2)(f), states:

“The transferor shall remain liable for all of the obligations to Franchisor in connection with this Agreement incurred prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by Franchisor to evidence such liability;”

The Item 17 summary for the Franchise Agreement, Section XIV.B.(2), lists:

“Conditions include: pay all amounts due us, not otherwise be in default, sign a general release, and pay a transfer fee.”

That summary does not mention retained liability, but the agreement itself does. The single-unit Franchise Agreement, Section XIV.B.(2)(h), also states:

“The transferor shall remain liable for all of the obligations to Franchisor in connection with the Restaurant incurred prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by Franchisor to evidence such liability;”

These provisions describe the named agreements, not every franchise contract. They preserve pre-transfer obligations; they do not establish that every future obligation survives or that a particular seller’s personal guaranty has been released.

Review the franchise transfer approval process alongside the actual release language. Keep the franchise transfer fee and the release of liability as separate questions in your closing review. Check the franchisor’s right of first refusal alongside the transfer conditions.

Gate two: the lender

For an SBA 7(a) loan, distinguish the buyer’s assumption from the seller’s release. SBA’s Servicing and Liquidation Actions 7(a) Lender Matrix, Version 18 (12/18/2025) lists them separately. SBA’s Matrix page, checked October 14, 2026, still lists that version and shows “Last updated January 22, 2026”.

Action in the Matrix	Unilateral action	Requires prior SBA approval
Assumption of Loan without release of original Borrower / Guarantor	E-Tran Required	No
Release Borrower or Guarantor	No	Yes, subject to note 21
Assumption of Loan in payment default with release of original Borrower / Guarantor	No	Yes, subject to note 21
Change in the ownership of a Borrower in the first 12 months after final disbursement	No	Yes

Note 21 exception: Releases of limited guaranties taken to secure an owner’s interest in collateral, and limited guaranties provided as a result of a partial change of ownership in accordance with Chapter 8, Paragraph D of SOP 50 57, do not require SBA prior written approval.

For 7(a) loans, the release-approval requirement comes from the Lender Matrix, a Loan Program Requirement; 13 CFR 120.536(a)(7) requires prior written SBA consent when a lender “Takes any action for which prior written consent is required by a Loan Program Requirement.” Paragraph (a) states an exception where otherwise provided in a Supplemental Guarantee Agreement with a Lender or an Agreement with a CDC. For 504 loans, paragraph 120.536(b)(4) directly requires prior written SBA consent before a CDC, other than a PCLP CDC, “Compromises or releases any claim against any Borrower or obligor, or against any guarantor, standby creditor, or any other person that is contingently liable for moneys owed on the loan.”

The distinction matters: the direct guarantor-release language in paragraph (b)(4) is a 504 CDC rule. It is not the provision that directly lists a 7(a) lender’s guarantor release.

The Matrix’s note 8 also states: “… Prior owners of a business may not re-acquire an ownership interest in the business if SBA financing used to purchase the business from the prior owner(s) remains outstanding.” Do not assume a seller can take back ownership while that purchase financing remains outstanding.

Use the SBA loans for franchises guide alongside this review of assumption and release. If you are buying a distressed franchise, ask the lender which Matrix row applies, including whether the loan is in payment default.

The combination is the actual risk

The two gates concern different obligations. A franchisor release does not establish a lender release, and a lender release does not establish a franchisor release. The Matrix’s assumption-without-release row shows why a buyer taking over the loan is not enough to establish that the original guarantor is free of it.

Ask both counterparties to confirm in writing what survives closing and have your attorney review the scope of each proposed release. When comparing a franchise resale with a new franchise, include the seller’s surviving obligations in the resale document review.

What official guides do and don’t cover

The International Franchise Association glossary, checked October 14, 2026, has no entry for guaranty, release, novation, assignment or assumption. Its only “guarantee” reference is in the site-approval definition:

“Site approval does not usually indicate any level of sales or guarantee of the success of the location.”

That is a finding about this glossary only. It does not explain guarantor release; the named FDD agreements, SBA Matrix and regulation above supply the provisions discussed here.

For how transfer conditions and related terms appear in the FDD, see FDD Item 17 explained.

Questions to ask before you close

• Does my franchise agreement state that I remain liable for pre-transfer obligations, and how does my signed guaranty apply to them?
• Will the franchisor issue an express release of guarantor, and in what document?
• Does the general release I am being asked to sign release me, or release the franchisor?
• Is my loan an SBA 7(a) or 504 loan, and is the buyer assuming it or refinancing it?
• Has a release of guarantor been requested, and is prior written SBA approval required and obtained?
• If this is a 7(a) loan, does the Matrix note 21 limited-guaranty exception apply?
• If approval is refused, what happens to the deal and to my liability?
• Does my spouse’s guarantee, if any, require a separate release?
• Will a franchise attorney and my lender confirm in writing what I remain liable for after closing?

Check the guaranty before you sign, not when you sell

Our free agreement red-flags checklist covers the guaranty, spousal-signature and transfer-release clauses to review with your attorney. Plus the due-diligence kit.

Email addressSend me the kit

Optional: connect me with a vetted franchise-development partner if I match what they're looking for. FranchiseFeast may be paid a referral fee for this. It is never required to get what you asked for, and you can withdraw at any time.Your background (optional)Prefer not to sayCorporate or executive backgroundEntrepreneur, no food experience yetI already operate multiple unitsSomething else

Company

The kit is educational only, not legal or financial advice. By subscribing you agree to ourterms and privacy policy. How we're paid, including referral fees:affiliate & referral disclosure.

Succession planning also requires checking what happens when a franchise owner dies alongside the guaranty.