factual

What section of the Burros Fries Franchise Agreement dictates the provisions for transferring ownership?

Burros_Fries Franchise · 2024 FDD

Answer 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:

    1. Franchisee shall confine its activities to the establishment and operation of the Business;
    1. 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;
    1. 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;
    1. 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 the 2024 Burros Fries Franchise Disclosure Document, Section 22 of the Franchise Agreement outlines provisions related to the transfer of ownership interests. Specifically, if the franchisee is a corporation, limited liability company, partnership, or other entity, the issuance, redemption, purchase for cancellation, and transfer of voting stock or other ownership interest must be restricted by the terms of the Franchise Agreement.

Burros Fries requires that the franchisee's governing documents, such as the Certificate, Articles of Incorporation, Articles of Organization, Certificate of Formation, Shareholders Agreement, Operating Agreement, Partnership Agreement, Business Trust Agreement, and/or Bylaws, must state that the entity's activities are limited to operating the Burros Fries business. These documents must also include restrictions on the transfer of ownership interests as per the Franchise Agreement. Franchisees must provide copies of these documents and any amendments to Burros Fries upon request.

Furthermore, Burros Fries mandates that franchisees maintain a current list of all record and beneficial owners of any class of voting stock or other ownership interest and provide this list upon request. Stop transfer instructions must be in place to prevent any transfer of equity securities unless it complies with Section 15 of the Franchise Agreement. All securities issued by the franchisee must bear a legend indicating that the transfer of these securities is subject to the terms and conditions of the Burros Fries Franchise Agreement.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.