For a Carls franchise, who is included in the Continuity Group if the Franchisee is a limited partnership?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is a business entity, Appendix D lists those persons who comprise Franchisee's "Continuity Group." CJR and Franchisee acknowledge and agree that it is their intent that the members of the Continuity Group include the Operating Principal (defined in Section 16.G.) and (1) all holders of a direct or indirect legal or beneficial interest of 10% or more ("10% Owners") in Franchisee; (2) if Franchisee is a limited partnership, all 10% Owners of Franchisee's general partner; and (3) all 10% Owners of a business entity that owns a controlling interest in Franchisee. In the event of any change in the Continuity Group or in the ownership interests of any member of the Continuity Group, Franchisee shall update Appendix D to reflect the change. The Continuity Group shall at all times own at least 51% of the ownership interests in Franchisee.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Continuity Group is defined for franchisees that are business entities. The Continuity Group includes the Operating Principal and several categories of owners. Specifically, if the franchisee is a limited partnership, the Continuity Group includes all 10% Owners of the franchisee's general partner.
In addition to the owners of the general partner, the Continuity Group also includes all holders of a direct or indirect legal or beneficial interest of 10% or more in the franchisee. It also includes all 10% Owners of a business entity that owns a controlling interest in the franchisee.
Carls requires that the Continuity Group at all times owns at least 51% of the ownership interests in the franchisee. Franchisees must update Appendix D of the Franchise Agreement to reflect any changes in the Continuity Group or in the ownership interests of any member of the Continuity Group.