Under what circumstances is a change in ownership considered a transfer for a Carbones Pizzeria franchise?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
- c. For the purposes of this Agreement, if Franchisee is a corporation, limited liability company or a partnership, any event which results in a cumulative change in ownership of the interests in the equity securities of Franchisee or the partnership interests of Franchisee of more than fifty percent (50%) of such ownership (counting all such changes from the date the Franchise was granted to Franchisee) shall be deemed a Transfer giving rise to all of the rights which Franchisor has or may have upon any such Transfer. Franchisee will not be charged a Transfer Fee if the Franchise is transferred to a corporation or limited liability company that is solely owned by Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, a change in ownership is considered a transfer if the franchisee is a corporation, limited liability company, or partnership. Specifically, if there is a cumulative change in ownership of more than fifty percent (50%) of the equity securities or partnership interests, it will be deemed a transfer. This calculation counts all changes from the date the franchise was initially granted.
This provision is significant for potential Carbones Pizzeria franchisees who operate under a corporate or partnership structure. If the ownership of the business changes hands by more than 50% cumulatively, even through a series of smaller transactions, the franchisor will consider it a transfer. This triggers the franchisor's rights and requirements related to transfers, such as the right of first refusal and the need for approval.
However, the document states that a franchisee will not be charged a transfer fee if the franchise is transferred to a corporation or limited liability company that is solely owned by the franchisee. This exception provides some flexibility for franchisees who may want to restructure their business for personal or tax reasons without incurring additional fees. It is important for franchisees to understand these conditions to avoid unexpected transfer fees and ensure compliance with the franchise agreement.