For a Carls franchise, if the franchisee is a limited partnership, who is included in the Continuity Group?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If you are any type of business entity other than a sole proprietorship, we and you will identify a "Continuity Group." The members of the Continuity Group will include: (1) the Development Principal; (2) the Operating Principal; (3) all holders of a direct or indirect legal or beneficial interest of 10% or more ("10% Owners") in Franchisee; (4) if Franchisee is a limited partnership, all 10% Owners in Franchisee's general partner; and (5) if any 10% Owner of Franchisee is a corporation or limited liability company, all 10% Owners in the entity that is a 10% Owner of Franchisee. You must notify us of any change in the Continuity Group. Each member of the Continuity Group and their spouses, if applicable, is bound by the confidentiality and non-competition restrictions described in Item 17 and must sign a guarantee assuming and agreeing to discharge all of your obligations to us unless we, in our sole discretion, waive or modify this requirement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 59–61)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if the franchisee is a limited partnership, the Continuity Group includes several specific individuals and entities. The Continuity Group is defined by Carls to ensure consistent management and adherence to franchise obligations.
The members of the Continuity Group are: the Development Principal, the Operating Principal, all holders of a direct or indirect legal or beneficial interest of 10% or more in the franchisee (referred to as "10% Owners"), and all 10% Owners in the franchisee's general partner. Additionally, if any 10% Owner of the franchisee is a corporation or limited liability company, all 10% Owners in that entity are also included in the Continuity Group.
Carls requires franchisees to notify them of any changes in the Continuity Group. Each member of the Continuity Group, along with their spouses, must sign a guarantee assuming all of the franchisee's obligations to Carls, and they are bound by confidentiality and non-competition restrictions. Carls retains the discretion to waive or modify this guarantee requirement. This comprehensive structure ensures that key individuals with significant ownership or operational roles are accountable for the franchise's performance and compliance with Carls's standards.