Can a Bumble Roofing franchisee pledge their assets used in connection with the business without 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 pledge assets related to the business is restricted. Specifically, if the franchisee operates as a corporation, limited liability company, partnership, or other business entity, they cannot pledge or encumber any shares or interest in the capital of such entity without the prior written consent of Bumble Roofing.
This restriction means that a Bumble Roofing franchisee must obtain approval from the franchisor before using their ownership stake in the business as collateral for any financial obligations. This requirement is in place to protect the franchisor's interests and ensure that control of the franchise remains with approved individuals.
The FDD also states that the articles of incorporation, articles of organization, operating agreement, partnership agreement, shareholder agreement, and by-laws of the business entity must state that the objectives are confined exclusively to the operation of the Bumble Roofing business and that the issuance and transfer of any shares, membership interest, partnership interest or other interest is restricted by the terms of the Franchise Agreement. This reinforces the franchisor's control over the ownership and operation of the franchise.
For a prospective Bumble Roofing franchisee, this means understanding that any transfer, sale, or encumbrance of ownership interests in the business requires the franchisor's explicit approval. Failing to obtain this approval could result in a breach of the franchise agreement and potential termination of the franchise.