Does the franchisee need to provide representations and warranties regarding the ownership and condition of ownership interests for Burros Fries?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is or becomes a corporation, limited liability company, limited liability partnership, general partnership or other organization or entity, the following requirements shall apply:
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- Franchisee shall confine its activities to the establishment and operation of the Business;
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- Franchisee's Certificate, Articles of Incorporation or Articles of Organization, Certificate of Formation, Shareholders Agreement, Operating Agreement, Partnership Agreement, Business Trust Agreement, and/or Bylaws (or comparable governing documents) shall at all times provide that its activities are confined exclusively to the operation of the Business and that the issuance, redemption, purchase for cancellation and transfer of voting stock, or other ownership interest therein, is restricted by the terms of this Agreement. Franchisee shall furnish us promptly upon request copies of Franchisee's Certificate of Formation, Articles of Incorporation, Bylaws, Operating Agreement, Partnership Agreement, Business Trust Agreement, Shareholders Agreement, and other governing documents, and any other documents we may reasonably request, and any amendments thereto, from time to time;
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- Franchisee shall maintain a current list of all owners of record and beneficial owners of any class of voting stock or other ownership interest in Franchisee and shall furnish such list to us upon request;
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- Franchisee shall maintain stop transfer instructions against the transfer on its record of any equity securities (voting or otherwise) or the certificate of any other entity evidencing ownership except in accordance with the provisions of Section 15 of this Agreement. All securities or other ownership interests issued by Franchisee shall bear the following legend, which shall be printed legibly and conspicuously on each stock certificate or other evidence of ownership interest:
THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE TERMS AND CONDITIONS OF THIS FRANCHISE AGREEMENT WITH BURROS & FRIES FRANCHISE, INC., OF THE SIGNING DATE. REFERENCE IS MADE TO SAID AGREEMENT AND TO THE RESTRICTIVE PROVISIONS OF THE ARTICLES AND BYLAWS OF THIS CORPORATION (IF THE FRANCHISEE IS A LIMITED LIABILITY COMPANY, REFERENCE WILL BE MADE TO THE TRANSFER OF OWNERSHIP RESTRICTIONS SET FORTH IN THIS FRANCHISE AGREEMENT, IN THE LIMITED LIABILITY COMPANY'S OPERATING AGREEMENT, IF THE FRANCHISEE IS A PARTNERSHIP, REFERENCE WILL BE MADE TO THE TRANSFER OF OWNERSHIP RESTRICTIONS SET FORTH IN THIS FRANCHISE AGREEMENT, IN THE PARTNERSHIP AGREEMENT. IF THE FRANCHISEE IS A BUSINESS TRUST, REFERENCE WILL BE MADE TO THE TRANSFER OF OWNERSHIP RESTRICTIONS SET FORTH IN THIS FRANCHISE AGREEMENT, IN THE TRUST AGREEMENT);
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, if the franchisee is a corporation, limited liability company, partnership, or other entity, they must adhere to specific requirements regarding their organizational documents and ownership interests.
The franchisee must ensure that their governing documents (such as Articles of Incorporation, Operating Agreement, etc.) confine their activities exclusively to operating the Burros Fries business. These documents must also restrict the transfer of voting stock or other ownership interests according to the terms of the Franchise Agreement. The franchisee is required to provide Burros Fries with copies of these documents and any amendments upon request.
Furthermore, the franchisee must maintain a current list of all owners of record and beneficial owners of any class of voting stock or other ownership interest and provide this list to Burros Fries upon request. Stop transfer instructions must be in place to prevent any transfer of equity securities except as allowed in Section 15 of the Franchise Agreement. All securities issued by the franchisee must bear a specific legend indicating that their transfer is subject to the terms and conditions of the Franchise Agreement.
In addition, the individuals executing the Franchise Agreement on behalf of a corporation, LLC, or partnership warrant that they have read and approved the agreement, including the restrictions on transferring their interests in the entity as outlined in Section 22. The franchisee also acknowledges and warrants that they received a complete copy of the Franchise Agreement and Disclosure Document, had ample opportunity to review it, and were advised to have it reviewed by an attorney.