What must be included on the share or stock certificates of a Big O Tires franchisee that is an entity?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
18.03 Transfer Legend. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Big O has granted the Franchise in reliance on Franchisee's personal background, business skills, experience, and financial capacity. It is important to Big O that Franchisee be known to Big O and always meet Big O's standards and requirements. Accordingly, neither Franchisee nor any Owner shall be permitted or have the power, without the prior written consent of Big O, to make any Transfer. To assure compliance by Franchisee with the transfer restrictions contained in this Section 18, all share or stock certificates of Franchisee, or other evidence of ownership in a Franchisee which is an Entity, shall at all times contain a legend sufficient under applicable law to constitute notice of the restrictions on such stock, or other said evidence of ownership, contained in this Agreement and to allow such restrictions to be enforceable. Such legend shall appear in substantially the following form:
The sale, transfer, pledge, or hypothecation of this [stock] is restricted pursuant to the terms of Section 18 of a Franchise Agreement dated between Big O Tires, LLC, and the issuer of these [shares].
Any Transfer that does not comply with the terms of this Section 18 shall be null and void.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, if a franchisee is an entity, all share or stock certificates or other evidence of ownership must contain a legend that provides notice of transfer restrictions outlined in Section 18 of the Franchise Agreement. This legend ensures that the restrictions on the stock or other ownership evidence are enforceable under applicable law.
The specific language of the legend must be substantially similar to the following: "The sale, transfer, pledge, or hypothecation of this [stock] is restricted pursuant to the terms of Section 18 of a Franchise Agreement dated between Big O Tires, LLC, and the issuer of these [shares]." This requirement is in place to ensure that Big O Tires maintains control over who becomes a franchisee and that any transfer of ownership complies with their standards and requirements.
Big O Tires emphasizes that the rights and duties within the Franchise Agreement are personal to the franchisee. The company grants the franchise based on the franchisee's background, business skills, experience, and financial capacity. Therefore, maintaining control over ownership through these transfer restrictions is crucial for Big O Tires. Any transfer that fails to comply with Section 18 of the Franchise Agreement will be considered null and void, protecting Big O Tires' interests in maintaining a consistent and qualified franchisee network.