What agreement must the Controlled Entity enter into with Boulder Designs before operating the franchised business?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
- vii. if Franchisee is a business entity, Franchisee has caused each of its stock certificates or other ownership interest certificates to be conspicuously endorsed upon the face thereof a statement in a form satisfactory to Franchisor that such ownership interest is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfers and assignments by this Agreement;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, if a franchisee is a business entity, they must ensure that each stock certificate or ownership interest certificate is conspicuously endorsed with a statement, in a form satisfactory to Boulder Designs, indicating that the ownership interest is subject to all transfer restrictions imposed by the Franchise Agreement. This endorsement must be placed on the face of the certificates.
This requirement ensures that Boulder Designs maintains control over who can own and operate a franchise, even if the franchise is owned by a corporation, LLC, or other business entity. By endorsing the stock certificates, any potential buyer of the business is made aware of the restrictions and obligations of the franchise agreement.
This is a fairly standard practice in franchising. It protects the franchisor by preventing unauthorized transfers of ownership that could compromise the brand or system standards. A prospective Boulder Designs franchisee operating as a business entity should be prepared to comply with this requirement before commencing operations.