What is Bath Tune Up's definition of an 'Equity Holder' in the context of the franchise agreement?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
1.1. Affiliate
An "Affiliate" of Franchisor or Franchisee, as the case may be, means all people in the following categories when they are conducting business activities related to Franchisor or Franchisee: (a) all people who Control, are Controlled by, or are under common Control with, Franchisor or Franchisee, (b) all direct or indirect shareholders, partners, members, or owners of Franchisor or Franchisee, regardless whether they Control Franchisor or Franchisee, and (c) all officers, directors, employees, and agents of Franchisor or Franchisee and of Franchisor's or Franchisee's other Affiliates.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Bath Tune Up defines an 'Affiliate' of the franchisee to include all direct or indirect shareholders, partners, members, or owners of the franchisee, regardless of whether they control the franchisee. This definition is relevant because the franchisor may need to interact with or approve certain actions related to these equity holders.
This broad definition has implications for prospective franchisees. For example, if a franchisee wishes to transfer ownership, Bath Tune Up may consider the effect that the transfer and the prospective transferees will have on the reputation or business operations of the franchised business, the marks, or the franchisor, or any of the franchisor's affiliates. This includes assessing the skills, qualifications, and economic resources of the proposed assignee(s).
Therefore, any changes in the ownership or equity structure of the franchisee's business may require franchisor approval, and the franchisor will assess the suitability of any new equity holders. Franchisees should carefully consider these factors when structuring their business and planning for potential ownership changes.