Buying a franchise does not automatically provide you with limited liability.  The franchisor may be a corporation or LLC but that does not make your own franchise business a corporation or LLC.  You must still form your own corporation or LLC in order to obtain the benefits of limited liability.  Otherwise, you will have a sole proprietorship or partnership which could subject you to personal liability.

It is a good idea to sign the franchise agreement in the name of your corporation or LLC even if you must personally guarantee the obligations of the agreement.  It could actually help you in unrelated litigation down the road.  In a case I am familar with the owner of a franchise did not sign the franchise agreement in the name of the LLC he allegedly used for his franchise business.  The plaintiff in that case attempted to impose personal liability on the owner because he had not signed the franchise agreement in the name of his LLC.  Further, the LLC owner did not sign his agreement with the Plaintiff in the name of his LLC.  The defendant used only the franchise name which did not give any indication to the Plaintiff that it was dealing with anything but a sole proprietorship.  Ultimately the court ruled in favor of the Plaintiff and personal liability for the debt was imposed. 

The lesson is to start with the corporate formalities from the beginning.  Be sure to sign agreements in the name of the corporate entity.  Here are some checklists for those interested in forming a corporation or LLC for their franchise or other business.  If you have any questions please be sure to talk to an experienced business attorney.