What is the definition of 'Non-Controlling Interest' in the context of transferring an All Dogs Unleashed franchise?
All_Dogs_Unleashed Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Controlling Interest" means: (a) if you are a corporation or a limited liability company, that the Owners, either individually or cumulatively (i) directly or indirectly own at least 51% of the shares of each class of the developer entity's issued and outstanding capital stock or membership units, as applicable; and (ii) are entitled, under its governing documents and under any agreements among the Owners, to cast a sufficient number of votes to require such entity to take or omit to take any action which such entity is required to take or omit to take under this Agreement; or (b) if you are a partnership, that the Owners (i) own at least 51% interest in the operating profits and operating losses of the partnership as well as at least 51% ownership interest in the partnership (and at least 51% interest in the shares of each class of capital stock of any corporate general partner); and (ii) are entitled under its partnership agreement or applicable law to act on behalf of the partnership without the approval or consent of any other partner or be able to cast a sufficient number of votes to require the partnership to take or omit to take any action which the partnership is required to take or omit to take under this Agreement.
Any interest less than 51% of the corporation, limited liability company, or partnership is a "Non-Controlling Interest."
Source: Item 23 — RECEIPTS (FDD pages 49–158)
What This Means (2025 FDD)
According to the 2025 All Dogs Unleashed Franchise Disclosure Document, a 'Non-Controlling Interest' is defined in relation to ownership percentages within a corporation, limited liability company, or partnership. Specifically, it refers to any ownership stake that is less than 51% of the entity. This definition is important in the context of franchise transfers because it clarifies the level of ownership that is considered sufficient to exert control over the business.
For a corporation or limited liability company, 'Controlling Interest' means that the owners, either individually or collectively, directly or indirectly own at least 51% of the shares of each class of the entity's issued and outstanding capital stock or membership units. They must also be entitled to cast a sufficient number of votes to require the entity to take or omit any action required under the Franchise Agreement. For a partnership, 'Controlling Interest' requires owners to possess at least a 51% interest in the operating profits and losses, as well as a 51% ownership interest in the partnership itself (and in each class of capital stock of any corporate general partner). These partners must also be able to act on behalf of the partnership without needing approval from other partners, or be able to cast enough votes to compel the partnership to act or not act as required by the Franchise Agreement.
Therefore, any ownership stake below these thresholds—less than 51%—constitutes a 'Non-Controlling Interest.' This distinction is crucial for All Dogs Unleashed franchisees because the franchisor's approval processes and requirements for franchise transfers may differ based on whether the transfer involves a controlling interest or merely a non-controlling one. A prospective franchisee should discuss with All Dogs Unleashed the specific implications of transferring a non-controlling interest, including any potential restrictions or requirements.