What is considered a 'Transfer of Controlling Interest' for an Aplus franchise?

According to Aplus's 2024 Franchise Disclosure Document, a 'Controlling Interest' is defined differently based on the franchisee's business structure. If the franchisee is a corporation, limited liability company, or other corporate entity, a controlling interest exists when the owners, either individually or collectively, 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. Additionally, these owners must be entitled, under the entity's governing documents and any agreements among the owners, to cast enough votes to require the entity to take or omit any action required under the Development Agreement.

If the Aplus franchisee is a partnership, a controlling interest is defined as the owners possessing at least a 51% interest in the operating profits and operating losses of the partnership, as well as at least 51% ownership interest in the partnership itself. This also includes at least 51% interest in the shares of each class of capital stock of any corporate general partner of the partnership.

For a prospective Aplus franchisee, understanding this definition is crucial because any transfer of a controlling interest requires the franchisor's prior written consent. Aplus, however, will not unreasonably withhold its consent to a transfer, but may condition its consent.