What constitutes a material breach of the Bumble Roofing franchise agreement regarding transfer of rights?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) No shares or interest in the capital of such corporation, limited liability company, partnership or other business entity shall be issued nor shall Franchisee directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, sell, assign, transfer, convey, donate, pledge, mortgage or otherwise encumber any such shares or interest or offer or attempt to do so or permit the same to be done without Franchisor's prior written consent;
- (c) The corporation shall maintain stop transfer instructions against the transfer of shares on its records subject to the restrictions of this Section and shall have all outstanding shares endorsed with the following legend printed conspicuously upon the face of each certificate:
"The transfer of this certificate is subject to the terms and conditions of a certain Franchise Agreement with BUMBLE ROOFING FRANCHISOR, LLC Reference is made to said Franchise Agreement and to the restrictive provisions of the articles of this corporation."
(d) The articles of incorporation, articles of organization, operating agreement, partnership agreement, shareholder agreement, and by-laws of the corporation, limited liability company, partnership or other business entity shall provide that its objectives or business is confined exclusively to the operation of the Business as provided for in this Agreement, and recite that the issuance and transfer of any shares, membership interest, partnership interest or other interest is restricted by the terms of this Agreement, and copies thereof shall be furnished to Franchisor upon request;
(e) Franchisor's consent to a transfer of any interest subject to the restrictions of this Section shall not constitute a waiver of any claim it may have against the assignor, nor shall it be deemed a waiver of Franchisor's right to demand exact compliance with any of the terms of this Agreement by the assignee;
(f) The corporation, partnership, limited liability company or other business entity shall advise Franchisor and keep Franchisor current as to the names and addresses of the directors, officers, members, partners and shareholder of and those persons financially involved in the corporation, partnership, limited liability company or other business entity; and
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, a material breach regarding the transfer of rights occurs if a franchisee issues shares or interests in their business entity (corporation, LLC, partnership, etc.) without obtaining prior written consent from Bumble Roofing. This restriction applies to any sale, assignment, transfer, conveyance, donation, pledge, mortgage, or encumbrance of these shares or interests, whether voluntary, involuntary, or by operation of law.
To ensure compliance, Bumble Roofing requires that the franchisee's business entity maintains stop transfer instructions on its records and that all outstanding shares are endorsed with a specific legend. This legend notifies potential transferees that the shares are subject to the terms and conditions of the Bumble Roofing franchise agreement. The company's organizational documents must also state that the business's objectives are limited to operating the Bumble Roofing franchise and that any transfer of ownership interests is restricted by the franchise agreement.
Even if Bumble Roofing consents to a transfer, this does not waive any claims it may have against the transferring franchisee or its right to demand compliance with the franchise agreement from the new owner. The franchisee must also keep Bumble Roofing informed about the names and addresses of all directors, officers, members, partners, shareholders, and other financially involved parties in their business entity. These stipulations are designed to protect Bumble Roofing's interests and ensure that any transfer of ownership adheres to the standards and requirements of the franchise system.