Are the rights and duties in the Bumble Roofing Franchise Agreement personal to the franchisee?
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
(g) Franchisee agrees to devote its full time and best efforts to manage the day-to-day operations of the Business unless it has an operational partner or Designated Business Manager approved by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the Franchise Agreement outlines specific conditions regarding the transfer of ownership interests, indicating that the rights and duties are indeed personal to the franchisee. Specifically, if the franchisee is a corporation, limited liability company, partnership, or other business entity, the agreement restricts the issuance, sale, assignment, transfer, or encumbrance of any shares or interests without the prior written consent of Bumble Roofing Franchisor, LLC. This requirement ensures that Bumble Roofing maintains control over who is involved in the franchise and that any new parties meet their standards.
To further ensure compliance, the agreement mandates that the entity maintain stop transfer instructions against the transfer of shares and include a conspicuous legend on each share certificate, referencing the Franchise Agreement and its restrictive provisions. The entity's governing documents must also confine its business exclusively to the operation of the Bumble Roofing business and acknowledge the transfer restrictions. These measures collectively prevent unauthorized transfers of ownership and ensure that the franchise remains under the control of approved individuals or entities.
Furthermore, Bumble Roofing's consent to a transfer does not waive any claims against the assignor or the right to demand compliance from the assignee. The franchisee is also obligated to keep Bumble Roofing informed about the directors, officers, members, partners, shareholders, and those financially involved in the business entity. Additionally, the franchisee must devote full time and best efforts to managing the day-to-day operations, unless an approved operational partner or Designated Business Manager is in place. These stipulations reinforce the personal nature of the franchisee's obligations and the importance of their direct involvement in the business.
In practical terms, a prospective Bumble Roofing franchisee should understand that they cannot simply transfer their franchise rights to another party without Bumble Roofing's explicit approval. This ensures that anyone taking over the franchise meets the franchisor's standards and is committed to operating the business according to the established system. This also protects the Bumble Roofing brand and the interests of other franchisees by maintaining consistency and quality across the franchise network.