What must the governing documents of a B Bops developer entity provide regarding ownership interests?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
ENTITY DEVELOPER. In the event Developer is a corporation, partnership (general or limited) or limited liability company on the effective date of this Agreement, or if the development rights or any ownership interest in Developer is thereafter transferred to a corporation, partnership or limited liability company in accordance with the provisions of Section 13 hereof, such entity shall comply with the following:
- (1) The entity shall be newly organized and its activities shall be confined exclusively to the development and operation of one or more Units pursuant to the terms of this Agreement and any Unit Franchise Agreements between the parties;
- (2) The governing documents of such entity shall provide that the issuance or transfer of any ownership interests in such entity shall be subject to the restrictions contained in this Agreement;
- (3) Any stock certificate or other evidence of ownership issued by such entity shall have conspicuously endorsed upon it a statement that it is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfer by this Agreement;
- (4) Any person who is or becomes the holder of a controlling interest in such entity or who has any responsibility for management of Developer, shall at the direction of Company execute a guaranty agreeing to be personally bound by the provisions of this Agreement; and
- (5) At the request of Company, such entity shall furnish to Company a certified copy of its governing documents and/or a list of all owners indicating their respective ownership interests in the entity.
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- ASSIGNMENT BY COMPANY.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, if a developer is a corporation, partnership, or limited liability company, its governing documents must state that any issuance or transfer of ownership interests is subject to the restrictions outlined in the development agreement. This means that B Bops wants to maintain control over who owns and operates its franchises, even indirectly through an entity.
Furthermore, any stock certificate or ownership evidence issued by the developer entity must conspicuously state that it is subject to transfer restrictions imposed by the development agreement. This ensures that any potential buyer of an ownership stake is aware of these restrictions upfront. B Bops aims to prevent unauthorized transfers of ownership that could compromise the brand's standards or reputation.
Additionally, B Bops requires that anyone holding a controlling interest in the developer entity or responsible for its management must execute a guaranty, agreeing to be personally bound by the development agreement's provisions if directed by B Bops. At B Bops's request, the entity must furnish a certified copy of its governing documents and a list of all owners with their respective ownership interests. This allows B Bops to monitor and enforce compliance with the ownership restrictions and ensure that those in control are accountable for the entity's obligations under the agreement.