According to the Atwell Suites FDD, what constitutes an 'Equity Interest'?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
a material breach of this License, for which IHG may terminate this License without opportunity to cure pursuant to paragraph 11. C of this License.
- (1) The term "Equity Interest" means all forms of ownership, including, without limitation, membership, stock, partnership or any other form of equity interests in an Entity or property, both legal and beneficial, voting and non-voting, including stock interests, partnership interests, limited liability company interests, joint tenancy interests, leasehold interests, proprietorship interests, trust beneficiary interests, proxy interests, power-of-attorney interests, and all options, warrants, and any other forms of interest evidencing ownership or Control. References in this License to "publicly traded Equity Interests" shall mean any Equity Interests which are traded on any securities exchange or are quoted in any publication or electronic reporting service maintained by the National Association of Securities Dealers, Inc. or any of its successors.
- (2) The term "Person" means an individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any national, provincial, state, county, tribal or municipal government or any bureau, office, department or agency thereof and any fiduciary acting in an agency capacity on behalf of any of the foregoing.
- (3) The term "Control" (and any form thereof, such as "controlling" or "controlled") means, with respect to any Person, the possession, directly or indirectly, of the power or ability to direct or cause the direction of the management or policies of such Person.
- (4) If Licensee is an Entity, Licensee represents that the Equity Interests in Licensee are directly and (if applicable) indirectly owned, as shown in Attachment "A".
- (5) In computing changes of Equity Interests pursuant to this paragraph 9, limited partners will not be distinguished from general partners, and IHG's judgment will be final if there is any question as to the definition of Equity Interests or as to the computation of relative Equity Interests, including transfers of Equity Interests, the principal considerations being:
- (a) direct and indirect power to exercise control over the affairs of Licensee;
- (b) direct and indirect right to share in Licensee's profits; and
- (c) amounts directly or indirectly exposed at risk in Licensee's business.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, an 'Equity Interest' encompasses a wide range of ownership forms within an entity or property. This includes, but is not limited to, membership, stock, partnership interests, and any other form of equity, whether legal or beneficial, voting or non-voting. The definition extends to stock interests, partnership interests, limited liability company interests, joint tenancy interests, leasehold interests, proprietorship interests, trust beneficiary interests, proxy interests, power-of-attorney interests, and all options, warrants, and any other forms of interest evidencing ownership or control.
For a prospective Atwell Suites franchisee, this definition is crucial because it dictates how ownership and control can be transferred or altered. Atwell Suites needs to approve any transfer of equity interest. The FDD also clarifies that 'publicly traded Equity Interests' refer to those traded on securities exchanges or quoted in publications or electronic reporting services maintained by the National Association of Securities Dealers, Inc., or its successors.
Furthermore, the FDD defines 'Person' as an individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any national, provincial, state, county, tribal or municipal government or any bureau, office, department or agency thereof and any fiduciary acting in an agency capacity on behalf of any of the foregoing. The term 'Control' is defined as the power or ability to direct the management or policies of a Person, whether directly or indirectly. These definitions are important because Atwell Suites assesses changes in equity interests based on the power to control the franchisee's affairs, the right to share in profits, and the amounts exposed at risk in the franchisee's business.
Atwell Suites emphasizes that if the franchisee is an entity, the equity interests must be directly and indirectly owned as shown in Attachment A. In computing changes of equity interests, limited partners are not distinguished from general partners, and Atwell Suites' judgment is final in defining equity interests or computing relative equity interests, including transfers. This broad definition and the franchisor's final say in interpreting it highlight the importance of transparency and adherence to the franchise agreement regarding ownership and control.