What documents related to the Controlled Entity must be furnished to All States M.E.D.?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
18.3 Transfer to a Controlled Entity
- 18.3.1 If Franchisee wishes to transfer this Agreement or any interest herein to a corporation, limited liability company or other legal entity which shall be entirely owned by Franchisee ("Controlled Entity"), which Controlled Entity is being formed for the financial planning, tax or other convenience of Franchisee, Franchisor's consent to such transfer shall be conditioned upon the satisfaction of the following requirements:
- (a) the Controlled Entity is newly organized and its charter or articles of formation provides that its activities are confined exclusively to the operation of the Franchised Business;
- (b) Franchisee or all holders of a legal or beneficial interest in Franchisee own all of the equity and voting power of the outstanding stock or other capital interest in the Controlled Entity;
- (c) all obligations of Franchisee to Franchisor or any Affiliate are fully paid and satisfied; provided, however, that neither Franchisee nor the Controlled Entity shall be required to pay a transfer fee as required according to Section 18.2(h);
- (d) the Controlled Entity has entered into a written agreement with Franchisor expressly assuming the obligations of this Agreement and all other agreements relating to the operation of the Franchised Business. If the consent of any other party to any such other agreement is required, Franchisee has obtained such written consent and provided the same to Franchisor prior to consent by Franchisor;
- (e) all holders of a legal or beneficial interest in the Controlled Entity have entered into an agreement with Franchisor jointly and severally guaranteeing the full payment of the Controlled Entity's obligations to Franchisor and the performance by the Controlled Entity of all the obligations of this Agreement;
- (f) each stock certificate or other ownership interest certificate of the Controlled Entity has conspicuously endorsed upon the face thereof a statement in a form satisfactory to Franchisor that it is held
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, if a franchisee wishes to transfer their agreement to a Controlled Entity (a corporation, LLC, or other legal entity fully owned by the franchisee for financial planning, tax, or other convenience), All States M.E.D.'s consent is required and depends on meeting specific conditions.
First, the Controlled Entity must be newly organized, with its charter limiting activities exclusively to operating the franchised business. Second, the franchisee or all holders of a legal or beneficial interest in the franchisee must own all equity and voting power in the Controlled Entity. Third, all the franchisee's obligations to All States M.E.D. or any affiliate must be fully satisfied.
Additionally, the Controlled Entity must enter into a written agreement with All States M.E.D., expressly assuming all obligations of the original agreement and any other agreements related to the franchised business. If any other party's consent is needed for these other agreements, the franchisee must obtain and provide that consent to All States M.E.D. before All States M.E.D. gives its consent. All holders of a legal or beneficial interest in the Controlled Entity must also enter into an agreement with All States M.E.D., jointly and severally guaranteeing the Controlled Entity's obligations and performance under the agreement. Finally, each ownership certificate of the Controlled Entity must have a statement, satisfactory to All States M.E.D., that it is subject to all transfer restrictions imposed by the agreement.