What constitutes a 'material interest' in the context of transferring a Christies International Real Estate franchise?

According to the 2025 Christies International Real Estate Franchise Disclosure Document, a Principal Owner is defined as any person or entity who directly or indirectly owns a 5% or greater interest in the franchise. This definition extends to shareholders or owners of a 5% or greater interest in a corporation or other entity that is a Principal Owner. In the case of a partnership being a Principal Owner, the definition includes each general partner and any owner of a 5% or greater interest in such general partner.

This definition is important because it clarifies who needs to be considered when assessing the ownership and control of a Christies International Real Estate franchise. For example, if a franchisee is a corporation, any individual owning 5% or more of the corporation's shares is considered a Principal Owner. Similarly, if the franchisee is a partnership, each general partner is considered a Principal Owner, as well as anyone holding a 5% or greater interest in a general partner that is an entity.

For a prospective franchisee, this means that Christies International Real Estate will likely scrutinize anyone holding a 5% or greater interest in the franchise entity. This scrutiny is typical in franchising, as franchisors want to ensure that all individuals with significant control over a franchise meet their standards and qualifications. This also has implications for transferring ownership; any transfer that results in a new Principal Owner will likely require franchisor approval. Therefore, franchisees need to be aware of this threshold when structuring their business and planning for potential ownership changes.