How does the All Team FDD define 'Principal Owner' for different business structures?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
- J. "Principal Owner" means the FRANCHISEE if FRANCHISEE is a sole proprietor, the majority shareholder of FRANCHISEE if FRANCHISEE is a corporation, a partner owning a majority share of the partnership if FRANCHISEE is a partnership, or the manager or member owning a majority of interest if the FRANCHISEE is a limited liability company.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the definition of 'Principal Owner' varies depending on the franchisee's business structure. This is important because the Principal Owner often has specific responsibilities and liabilities within the franchise agreement.
If the franchisee is a sole proprietor, the Principal Owner is simply the franchisee themselves. For franchisees operating as a corporation, the Principal Owner is defined as the majority shareholder. In the case of a partnership, the Principal Owner is the partner who owns a majority share of the partnership. Finally, if the franchisee is a limited liability company (LLC), the Principal Owner is the manager or member who owns a majority of the interest in the LLC.
This definition is crucial for determining who has the authority to make decisions and who is ultimately responsible for the franchise's performance. Prospective All Team franchisees should carefully consider their business structure and understand who will be designated as the Principal Owner, as this designation carries significant legal and operational implications.