What is the significance of the 'Owner Individuals' section in the Cinch I.T. agreement?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
rocure such insurance and to charge the cost of such insurance to You, which charges, together with a reasonable fee for Our expenses in taking such action, shall be payable by You immediately upon notice from Us.
24. BUSINESS ORGANIZATION AND PERSONAL GUARANTY(S)
- (a) If You are an individual or individuals, then You acknowledge and agree that the grant of license in Section 3 is made by Us in reliance on Your personal attributes and in consideration of the trust and confidence which We place in You, and on Your representation that You will actively and substantially participate personally in the beneficial ownership and management of the CINCH I.T. Franchised Business.
- (b) In the event You are a business entity (including but not limited to a corporation, a limited liability company, a partnership, a limited liability partnership, a trust), in addition to being newly formed, You must complete and sign the Principal Owner's Statement attached to this Agreement as Addendum D and each individual with an ownership interest in You must also sign Addendum D. Further, You represent, warrant and covenant that:
- (i) You are newly formed, duly organized and validly exist under the laws of the state in which You were formed;
- (ii) You are duly qualified and are authorized to do business in each jurisdiction in which Your business activities or the nature of the properties owned by You require such qualification;
- (iii) The execution of and transactions contemplated by this Agreement are within Your powers;
- (iv) The ownership interests in You are accurately and fully listed in Addendum D;
- (v) Each and every person with an ownership interest in You shall sign the Guaranty Agreement attached to this Agreement as Addendum C and You shall provide the original signed Guaranty Agreement to Us;
- (vi) The stated purpose of the business entity shall consist only of the development, ownership, operation and maintenance of the CINCH I.T. Franchised Business;
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the 'Owner Individuals' section is significant because it outlines specific requirements and obligations for franchisees who are individuals or business entities. If a franchisee is an individual, Cinch I.T. grants the license based on the personal attributes, trust, and confidence they place in the franchisee, expecting them to actively participate in the business's ownership and management. This highlights the importance Cinch I.T. places on the personal involvement of individual owners in their franchise.
For franchisees operating as a business entity, such as a corporation or LLC, the agreement mandates that they complete and sign the Principal Owner's Statement (Addendum D). Each individual with an ownership interest in the entity must also sign Addendum D. This statement ensures that Cinch I.T. has a clear record of all ownership interests. The business entity must be newly formed, duly organized, and validly existing under the laws of its state. It must also be qualified to do business in each jurisdiction where its activities require such qualification. The ownership interests in the entity must be accurately listed in Addendum D, and every person with an ownership interest must sign a Guaranty Agreement (Addendum C).
Furthermore, the agreement stipulates that the business entity's purpose should solely consist of the development, ownership, operation, and maintenance of the Cinch I.T. Franchised Business. This restriction ensures that the entity remains focused on the Cinch I.T. franchise and does not engage in other business activities that could potentially divert resources or attention. Cinch I.T. requires an updated Addendum D within five business days of any change in the equity ownership of a Multi-Unit Developer. These stipulations collectively ensure that Cinch I.T. maintains control over who is involved in the ownership and management of its franchises, safeguarding the brand and the network's integrity.