What legend must be printed on all securities or other ownership interests issued by a Burros Fries franchisee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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 the 2024 Burros Fries Franchise Disclosure Document, if a franchisee is a corporation, limited liability company, partnership, or other entity, all securities or ownership interests issued by the franchisee must bear a specific legend. This legend must be printed legibly and conspicuously on each stock certificate or other evidence of ownership interest.
The required legend states that the transfer of these securities is subject to the terms and conditions of the Franchise Agreement with Burros & Fries Franchise, Inc., as of the signing date. It also references the restrictive provisions of the articles and bylaws of the corporation, or if the franchisee is a limited liability company, the transfer of ownership restrictions set forth in the Franchise Agreement and the company's operating agreement. Similar references are made for partnerships and business trusts, pointing to the respective partnership or trust agreements.
This requirement ensures that any potential investor or transferee is aware that the ownership interests are subject to the restrictions outlined in the Burros Fries Franchise Agreement. This protects Burros Fries's interests by maintaining control over who can become a franchisee and ensuring compliance with the franchise terms. Prospective franchisees should understand that this restriction on transferability could affect the liquidity and value of their ownership interests.