What does the Chocolate Bash franchisee represent regarding agreements and their owners?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
ry through channels of distribution (including the internet) other than Chocolate Bash outlets.
- 2.3 Franchisee Control. Franchisee represents that Attachment 1 (i) identifies each owner, officer and director of Franchisee, and (ii) describes the nature and extent of each owner's interest in Franchisee. If any information on Attachment 1 changes (which is not a Transfer), Franchisee shall notify CB Franchising within 10 days.
- 2.4 Principal Executive. Franchisee agrees that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee. The Principal Executive must have at least 10% ownership interest in Franchisee. The Principal Executive does not have to serve as a day-today general manager of the Business, but the Principal Executive must devote substantial time and attention to the Business. If the Principal Executive dies, becomes incapacitated, transfers his/her interest in Franchisee, or otherwise ceases to be the executive primarily responsible for the Business, Franchisee shall promptly designate a new Principal Executive, subject to CB Franchising's reasonable approval.
- 2.5 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to CB Franchising, in the form of Attachment 3.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, the franchisee makes specific representations concerning the identification and ownership details of the franchise. The franchisee must provide a document (Attachment 1) that identifies each owner, officer, and director of the franchisee entity, and describes the nature and extent of each owner's interest in the Chocolate Bash franchise. Any changes to the information on Attachment 1 must be reported to Chocolate Bash Franchising within 10 days, provided the change does not constitute a Transfer of ownership.
The franchisee must also designate a "Principal Executive" who is primarily responsible for the Chocolate Bash business and has decision-making authority. This Principal Executive must have at least a 10% ownership interest in the franchise. While the Principal Executive is not required to be the day-to-day general manager, they must devote substantial time and attention to the business. If the Principal Executive changes due to death, incapacitation, transfer of interest, or other reasons, a new Principal Executive must be designated, subject to Chocolate Bash's approval.
If the franchisee is a business entity, each owner is required to sign a personal guaranty, ensuring their individual commitment to the franchisee's obligations to Chocolate Bash. In California, each owner of the franchise is required to execute a personal guaranty. Doing so could jeopardize the marital assets of non-owner spouses domiciled in community property states such as California. This requirement is designed to provide Chocolate Bash with additional security and recourse in case of default or non-compliance by the franchisee.