Can a Bumble Roofing franchisee encumber their assets without the franchisor's approval?
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;
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, a franchisee's ability to encumber assets is restricted. Specifically, if the franchisee operates as a corporation, limited liability company, partnership, or other business entity, they cannot sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any shares or interest in the capital of such entity without Bumble Roofing's prior written consent.
This restriction is significant for prospective Bumble Roofing franchisees because it limits their ability to use their ownership in the franchise entity as collateral for financing or other purposes without the franchisor's approval. This requirement allows Bumble Roofing to maintain control over the ownership and management of its franchises, ensuring that any transfer of ownership or encumbrance of assets aligns with their standards and policies.
Furthermore, the franchise agreement stipulates that the entity's governing documents (articles of incorporation, operating agreement, etc.) must confine the business's objectives exclusively to the operation of the Bumble Roofing business. These documents must also state that the issuance and transfer of any shares or interests are restricted by the terms of the Franchise Agreement. This provision reinforces Bumble Roofing's control over the franchise's operations and ownership structure.
Bumble Roofing also requires that the corporation maintain stop transfer instructions against the transfer of shares and that all outstanding shares are endorsed with a specific legend referencing the Franchise Agreement. This measure ensures that any potential buyer or transferee is aware of the restrictions imposed by the franchise agreement. These combined measures provide Bumble Roofing with substantial oversight regarding changes in ownership or financial encumbrances related to the franchise.