Can Bumble Roofing offer its securities privately without the franchisee's consent?
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)
Based on the 2025 Franchise Disclosure Document, Bumble Roofing requires franchisees to obtain prior written consent from the franchisor before issuing shares or interests in the capital of the franchisee's business entity. This restriction applies to any direct or indirect, voluntary or involuntary sale, assignment, transfer, conveyance, donation, pledge, mortgage, or encumbrance of such shares or interests. This means a franchisee cannot offer or attempt to transfer ownership without Bumble Roofing's approval.
To ensure compliance, the franchisee's corporation must maintain stop transfer instructions against the transfer of shares on its records. Additionally, all outstanding shares must be endorsed with a legend indicating that the transfer of the certificate is subject to the terms and conditions of the Franchise Agreement with Bumble Roofing Franchisor, LLC. This legend must be conspicuously printed on the face of each certificate.
The articles of incorporation, articles of organization, operating agreement, partnership agreement, shareholder agreement, and by-laws of the franchisee's business entity must state that its business is confined exclusively to the operation of the Bumble Roofing business as outlined in the Franchise Agreement. These documents must also state that the issuance and transfer of any shares, membership interest, partnership interest, or other interest is restricted by the terms of the agreement. Copies of these documents must be provided to Bumble Roofing upon request.
Bumble Roofing's consent to a transfer of any interest does not waive any claim it may have against the assignor, nor does it waive Bumble Roofing's right to demand compliance with the terms of the agreement by the assignee. The franchisee's business entity must also keep Bumble Roofing informed of the names and addresses of its directors, officers, members, partners, shareholders, and those financially involved in the entity. These measures ensure Bumble Roofing maintains control over the ownership and management of its franchises and protects its interests in the franchise system.