In the Bft FDD, what information must be provided about the owners of the Developer?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, based on Developer's own investigation and diligence, Developer has requested that Franchisor grant Developer the right to acquire multiple franchises (each a "Franchise") for the development and operation of Studios (the "Development Rights") in a defined geographic area (the "Development Area") pursuant to an agreed upon schedule (the "Development Schedule") set forth in this Agreement and, to support Developer's request, Developer and, if applicable, its owners have provided Franchisor with certain information about its and their background, experience, skills, financial condition and resources (collectively, the "Application Materials"). In reliance on, among other things, the Application Materials, Franchisor is willing to grant Developer the Development Rights on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of and reliance on the foregoing Recitals (which are incorporated herein by reference), the agreements described below, and other valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
1. OWNERSHIP; PRINCIPALS
If Developer is not a natural person (a "Business Entity"), Developer agrees, represents and warrants to Franchisor that: (1) it was validly formed and will maintain, throughout the Term (defined in Section 2.A below), its existence and good standing under the laws of the state of its formation and qualified to do business in the jurisdictions covered by the Development Area; (2) Exhibit A to this Agreement describes all of Developer's owners and their interests in Developer as of the Effective Date; (3) each of Developer's owners that has at least 10% direct or indirect ownership interest in Developer, and their spouse, will sign and deliver to Franchisor its then-standard form of Guarantee, Indemnification, and Acknowledgment (the "Guaranty"), the current form of which is attached as Exhibit B hereto; (4) the only business Developer will own or operate during the Term will
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, if the Developer is a business entity, certain information about its owners must be disclosed to Bft. Specifically, Exhibit A to the Multi-Unit Agreement must detail all of the Developer's owners and their respective ownership interests as of the agreement's effective date. This requirement ensures Bft is fully aware of the ownership structure of the entity it is partnering with for area development.
Furthermore, any owner holding at least a 10% direct or indirect ownership interest in the Developer, along with their spouse, is required to sign and deliver Bft's standard form of Guarantee, Indemnification, and Acknowledgment (the "Guaranty"), which is included as Exhibit B to the agreement. This guaranty ensures that individuals with significant financial stakes in the Developer are personally liable for the Developer's obligations to Bft.
These requirements are typical in franchising, as franchisors like Bft need to assess the financial stability and commitment of those controlling a multi-unit development operation. By requiring detailed ownership information and personal guarantees from significant owners, Bft aims to mitigate risks associated with the Developer's performance and adherence to the Multi-Unit Agreement.