How is a 'controlling ownership interest' defined in the Capriottis Sandwich Shop DRA?
Capriottis_Sandwich_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
References to a "controlling ownership interest" in you or one of your owners (if an entity) mean the percent of voting shares or other voting rights resulting from dividing one hundred percent (100%) of the ownership interests by the number of owners.
In the case of a proposed transfer of an ownership interest in you or one of your owners, whether a "controlling ownership interest" is involved must be determined both immediately before and immediately after the proposed transfer to see if a "controlling ownership interest" will be transferred (because of the number of owners before the proposed transfer) or will be deemed to have been transferred (because of the number of owners after the proposed transfer).
Source: Item 23 — RECEIPTS (FDD pages 73–303)
What This Means (2025 FDD)
According to the 2025 Capriottis Sandwich Shop Franchise Disclosure Document, a 'controlling ownership interest' in you or one of your owners (if an entity) is defined as the percentage of voting shares or other voting rights that results from dividing one hundred percent (100%) of the ownership interests by the number of owners.
This definition is important because the DRA states that a transfer of development rights would occur if there is a transfer of a controlling ownership interest in you or in an entity with a controlling ownership interest in you. However, an assignment of only a non-controlling ownership interest in you is permitted and would not be deemed a transfer of your development rights.
The FDD clarifies that when considering a proposed transfer of ownership, the determination of whether a 'controlling ownership interest' is involved must be assessed both immediately before and immediately after the proposed transfer. This is to ascertain if a 'controlling ownership interest' will be transferred due to the number of owners before the transfer or will be deemed to have been transferred because of the number of owners after the proposed transfer. This ensures that any changes in ownership structure are carefully evaluated to protect the development rights granted under the DRA.