Globe and Mail:

When dealing with prospective franchisees, I always try to minimize their personal exposure so that if the venture fails “ma and pa” don’t lose their house, their farm, their RRSPs or their shirts.

One spouse can take the risk and become the sole director and shareholder of the company that’s created to enter the franchisee agreement, while the other spouse has no formal involvement, and therefore should not provide any guarantee for the business.

Another approach is to try to eliminate or cap the personal guarantee the principal director or shareholder will be asked to give the franchisor, either through a flat monetary cap, or an amount that goes down each year. More.