Regarding ownership of a City Wide franchise, what is the requirement for a majority owner?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Agreement, the terms "Franchisee" and "Franchisee's" will include all persons who succeed to the interest of the original Franchisee by transfer or operation of law. If Franchisee is a legal entity, then at least one natural person will have at least a majority ownership interest in Franchisee. By their signatures to this Agreement, all partners, shareholders, officers, and directors of the entity that sign this Agreement as Franchisee acknowledge and accept the duties and obligations imposed upon each of them, individually, by the terms of this Agreement. The singular usage includes the plural, and the masculine usage includes the feminine. All partners, shareholders, officers, and directors of the entity executing the Franchise Agreement are required to execute the Guaranty and Assumption of Obligations which is attached to this Franchise Agreement as Attachment A-1. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as Attachment A-2.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if the franchisee is a legal entity, at least one natural person must have a majority ownership interest. This means that if the franchise is owned by a corporation, LLC, or other business entity, at least one individual person must hold more than 50% of the ownership. This requirement ensures that there is a clear individual with controlling interest and responsibility for the franchise.
Furthermore, all partners, shareholders, officers, and directors of the entity signing the Franchise Agreement must acknowledge and accept the duties and obligations imposed upon them individually by the terms of the agreement. They are also required to execute a Guaranty and Assumption of Obligations, ensuring their personal commitment to the franchise's success and adherence to the franchise agreement. Spouses or domestic partners of principals, owners, or stockholders will be required to provide a conditional guaranty of payment.
This requirement is fairly standard in franchising, as franchisors typically want to ensure that there is a responsible individual ultimately in control, even if the franchise is owned by a business entity. This individual is then held accountable for the franchise's performance and compliance with the franchise agreement. Prospective franchisees should be aware of this requirement and ensure that their ownership structure meets this condition before entering into a franchise agreement with City Wide.