What constitutes an 'Equity Transfer' that would require approval from Baymont Inn Suites?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
Equity Interests shall include, without limitation, all forms of equity ownership of you, including voting stock interests, partnership interests, limited liability company membership or ownership interests, joint and tenancy interests, the proprietorship interest, trust beneficiary interests and all options, warrants, and instruments convertible into such other equity interests.
Equity Transfer means any transaction or series of transactions in which your owners or you sell, assign, transfer, convey, pledge, or suffer or permit the transfer or assignment of, any percentage of your Equity Interests that will result in a change in control of you to persons other than those persons disclosed on Schedule B as in effect prior to the transaction. Unless there are contractual modifications to your owners' rights, an Equity Transfer of a corporation or limited liability company occurs when either majority voting rights or beneficial ownership of more than 50% of the Equity Interests changes in one transaction or a series of transactions. An Equity Transfer of a partnership occurs when a newly-admitted partner will be the managing, sole, or controlling general partner, directly or indirectly through a change in control of the Equity Interests of an entity general partner in one transaction or a series of transactions. An Equity Transfer of a trust occurs when either a new trustee with sole investment power is substituted for an existing trustee, or a majority of the beneficiaries convey their beneficial interests to persons other than the beneficiaries existing on the Effective Date in one transaction or a series of transactions. An Equity Transfer does not occur when the Equity Interest ownership among the owners of Equity Interests on the Effective Date changes without the admission of new Equity Interest owners. An Equity Transfer occurs when you merge, consolidate or issue additional Equity Interests in a transaction that would have the effect of diluting the voting rights or beneficial ownership of your owners' combined Equity Interests in the surviving entity to less than a majority in one transaction or a series of transactions.
Source: Item 22 — CONTRACTS (FDD pages 96–97)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, an Equity Transfer involves transactions where the owners sell, assign, transfer, convey, pledge, or permit the transfer of any percentage of their Equity Interests, resulting in a change of control to individuals not listed on Schedule B. Equity Interests include all forms of equity ownership, such as stock, partnership interests, LLC membership, and trust beneficiary interests. These transfers generally require Baymont Inn Suites's approval.
For corporations or LLCs, an Equity Transfer occurs when either majority voting rights or beneficial ownership of more than 50% of the Equity Interests changes in one transaction or a series of transactions. In partnerships, it happens when a newly admitted partner becomes the managing, sole, or controlling general partner, either directly or indirectly through a change in control of the Equity Interests of an entity general partner. For trusts, an Equity Transfer takes place when a new trustee with sole investment power is substituted for an existing one, or when a majority of the beneficiaries convey their beneficial interests to persons other than the beneficiaries existing on the Effective Date.
Importantly, a change in Equity Interest ownership among the existing owners on the Effective Date, without the admission of new Equity Interest owners, does not constitute an Equity Transfer. However, an Equity Transfer does occur if the franchisee merges, consolidates, or issues additional Equity Interests in a way that dilutes the voting rights or beneficial ownership of the owners' combined Equity Interests in the surviving entity to less than a majority in one transaction or a series of transactions. This definition is crucial for prospective franchisees to understand, as any transaction meeting these criteria requires franchisor approval, and failure to obtain such approval could result in a breach of the franchise agreement.