What statement regarding transfer restrictions must be endorsed on stock certificates of a Controlled Entity for City Publications?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- Each stock certificate or other ownership interest certificate of the Controlled Entity shall have conspicuously endorsed upon the face thereof of a statement in a form satisfactory to Franchisor that it is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfers and assignments by this Agreement.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, if a franchisee operates their City Publications franchise through a Controlled Entity (such as a corporation), specific requirements apply to the stock certificates or ownership interest certificates of that entity. Each certificate must have a statement conspicuously endorsed on its face. This statement must be in a form satisfactory to City Publications, indicating that the stock or ownership interest is held subject to the transfer restrictions outlined in the Franchise Agreement.
This requirement ensures that any potential transfer of ownership in the Controlled Entity is subject to the same restrictions as a direct transfer of the franchise itself. City Publications retains control over who becomes a franchisee, even indirectly through ownership changes in a franchisee's business entity. This protects City Publications' interests by preventing unauthorized or unqualified individuals from gaining control of a franchise.
For a prospective City Publications franchisee, this means that if they choose to operate under a corporate structure, they must ensure that all stock certificates or ownership documents include the required endorsement. Failure to comply with this requirement could potentially lead to a breach of the Franchise Agreement and possible termination of the franchise. It is important to work closely with City Publications to ensure the wording of the endorsement is satisfactory to them and fully complies with the agreement.