What section of the B Bops franchise agreement specifies the requirements for ownership of the franchise by an entity?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
ENTITY FRANCHISEE.
In the event Franchisee is a partnership (general or limited), corporation or limited liability company on the effective date of this Agreement, or if the Franchise or any ownership interest in Franchisee is thereafter transferred to a partnership,
corporation or limited liability company in accordance with the provisions of Section 19(A) 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 B-Bop's Restaurants pursuant to the terms of this Agreement or other franchise agreements with Company;
(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;
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, Section 20, titled "ENTITY FRANCHISEE," outlines the specific requirements if the franchisee is a partnership, corporation, or limited liability company. This section applies both if the franchisee is an entity from the start or if the franchise is later transferred to one.
The requirements stipulate that the entity must be newly organized and exclusively focused on developing and operating B Bops Restaurants, adhering to the franchise agreement terms. The entity's governing documents must also state that any ownership interest transfers are subject to the restrictions outlined in the franchise agreement.
Furthermore, any stock certificates or ownership evidence issued by the entity must clearly state that they are subject to all transfer restrictions imposed by the franchise agreement. This ensures that all parties involved are aware of the limitations and obligations associated with owning a B Bops franchise through an entity.