Who wholly owns the Class A Membership interest of Beggars Pizza Franchise, LLC?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
ed $10,010 and $9,166, respectively, and are included in accounts payable on the balance sheet.
3. Members' Equity
BPF Holding Corporation wholly owns the Class A Membership interest of Beggars Pizza Franchise, LLC. In accordance with the operating agreement (the "Agreement") of the Company, the Company issued Class B and C member units as profits interest units. Pursuant to the Agreement, Class B units vest only upon the achievement of certain hurdles, and Class C units are immediately vested. As of December 31, 2024 and 2023, Class B units are not vested. For the years ended December 31, 2024 and 2023, there was no compensation expense related to the issuance of the Class B and C units.
Voting rights are allocated to each member class based on the provisions of the Agreement. A general description of the Agreements distribution provisions are as follows:
First, 100 percent to Class A members' pro rata until the cumulative distributions received by the members equals $4,176,000.
Second, 100 percent to the Class B and C members in proportion to their vested percentage until the cumulative distributions received by such members equals $2,435,999.
Thereafter, pro rata to memb
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the Class A Membership interest of Beggars Pizza Franchise, LLC is wholly owned by BPF Holding Corporation. The document also mentions that Beggars Pizza has issued Class B and C member units as profits interest units, but these are governed by specific vesting conditions outlined in the company's operating agreement. As of December 31, 2024 and 2023, the Class B units were not vested.
This ownership structure has implications for how profits and voting rights are distributed within Beggars Pizza. The Class A members, in this case BPF Holding Corporation, receive the first $4,176,000 in cumulative distributions. Following that, the Class B and C members receive 100% of distributions until they reach a cumulative total of $2,435,999. After these initial distributions, profits are distributed pro rata, with Class A receiving 63.2%, Class B receiving 30%, and Class C receiving 6.8%.
For a prospective Beggars Pizza franchisee, understanding this ownership and distribution structure is important because it clarifies who controls the franchise system and how profits are allocated among the different member classes. While franchisees do not directly participate in this equity structure, it provides insight into the financial incentives and decision-making processes at the franchisor level. This knowledge can help franchisees assess the long-term stability and strategic direction of Beggars Pizza.
It's worth noting that the Class B units' vesting is contingent upon achieving certain hurdles, which are not specified in this excerpt. A potential franchisee might want to inquire about the nature of these hurdles to better understand the potential for changes in the distribution of profits and control in the future.