What is considered an 'Equity Interest' in an Entity for the purposes of the Buff City Soap franchise agreement?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) If Franchisee is not publicly traded (i.e., less than 20% of its equity shares that are entitled to participate in the election of its Board of Directors are traded on a national exchange in the United States), it will disclose to Franchisor all Principals holding in excess of 5% of all Equity Interests in Franchisee and will disclose to Franchisor all beneficial owners, directors, officers, employees or agents of Franchisee who are government officials.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to the 2025 Buff City Soap Franchise Disclosure Document, if a franchisee is not publicly traded, they must disclose to Buff City Soap all principals holding in excess of 5% of all Equity Interests in the franchisee entity. They must also disclose all beneficial owners, directors, officers, employees, or agents of the franchisee who are government officials.
This disclosure requirement ensures that Buff City Soap is aware of the individuals who have a significant financial stake in the franchise and any potential conflicts of interest arising from government affiliations. This is a fairly standard practice in franchising, as franchisors typically want to know who the key players are in their franchisees' businesses.
For a prospective Buff City Soap franchisee, this means that if your ownership structure involves multiple individuals or entities, you will need to be transparent with Buff City Soap about who holds more than 5% equity. Additionally, any connections to government officials must be disclosed. Failure to comply with these disclosure requirements could potentially lead to issues with the franchise agreement.