What is the Chocolate Fish Coffee franchisee required to do if the Principal Executive changes?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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 Chocolate Fish Franchising's reasonable approval.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the franchisee must promptly designate a new Principal Executive subject to Chocolate Fish Franchising's reasonable approval if the current Principal Executive dies, becomes incapacitated, transfers their interest in the franchise, or otherwise ceases to be the executive primarily responsible for the business.
The Principal Executive is defined as the person designated on the Summary Page of the franchise agreement who is primarily responsible for the Chocolate Fish Coffee business and has decision-making authority on behalf of the franchisee. This individual must also maintain at least a 10% ownership interest in the franchise.
While the Principal Executive is not required to manage the day-to-day operations, they must devote substantial time and attention to the business. This requirement ensures that someone with a vested interest and decision-making power is actively involved in the franchise's success, which is a common requirement in franchising to maintain brand standards and operational efficiency.