What is the exception to the non-solicitation agreement for Beef O Bradys franchisees regarding ownership of stock in public companies?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Public Companies: Notwithstanding the foregoing, any aggregate ownership of 5% or less of the issued and outstanding shares of any class of stock of a publicly traded company is not prohibited by the provisions of this Section.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to the 2025 Beef O Bradys FDD, there is an exception to the non-solicitation agreement regarding ownership of stock in publicly traded companies. Specifically, the non-solicitation clause does not prohibit a franchisee from owning up to an aggregate of 5% of any class of stock in a publicly traded company.
However, this exception applies only if the company is publicly held and its stock is listed and traded on a national or regional stock exchange, or through the National Association of Securities Dealers Automated Quotation System (NASDAQ). Additionally, the franchisee must not control the company in question, meaning they cannot exert significant influence over the company's management or operations.
This exception allows Beef O Bradys franchisees to make minor investments in publicly traded companies that may be considered competitive businesses without violating the non-solicitation agreement. However, it is crucial for franchisees to ensure their ownership remains below the 5% threshold and that they do not exert control over the company to stay compliant with the franchise agreement.