How is a 'controlling ownership interest' defined in the Clean Your Dirty Face franchise agreement?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
References to a "controlling ownership interest" in you or one of your owners (if an Entity) mean the percent of the voting shares or other voting rights that results from dividing one hundred percent (100%) of the ownership interests by the number of owners. In the case of a proposed transfer of an ownership interest in you or one of your owners, the determination of whether a "controlling ownership interest" is involved must be made as of both immediately before and immediately after the proposed transfer to see if a "controlling ownership interest" will be transferred (because of the number of owners before the proposed transfer) or will be deemed to have been transferred (because of the number of owners after the proposed transfer).
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, a 'controlling ownership interest' is defined by the percentage of voting shares or other voting rights. This percentage is calculated by dividing one hundred percent (100%) of the ownership interests by the number of owners.
This definition is relevant when considering the transfer of ownership interests in the Clean Your Dirty Face franchise. The franchise agreement stipulates that the determination of whether a 'controlling ownership interest' is involved must be assessed both immediately before and immediately after the proposed transfer. This is to ascertain if a controlling interest will be transferred due to the number of owners before the transfer or if it will be deemed to have been transferred because of the number of owners after the transfer.
For a prospective Clean Your Dirty Face franchisee, this means that any transfer of ownership must be carefully evaluated to ensure compliance with the franchise agreement. Both the number of owners before and after the transfer are critical in determining whether the transfer involves a controlling interest. This clause protects Clean Your Dirty Face's interests by ensuring that significant changes in ownership are subject to their review and approval, maintaining the consistency and standards of the franchise system.