What is required before a Clear Pest Pros franchisee legal entity can issue or sell securities?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither the legal entity nor any of its owners may issue or sell, or offer to issue or sell, any securities of the legal entity or an affiliate of the legal entity, regardless of whether such sale or offer would be required to be registered pursuant to the provisions of the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction, without obtaining our prior written consent, which is in our sole discretion, and complying with all of our requirements and restrictions concerning use of information about us.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to the 2025 Clear Pest Pros Franchise Disclosure Document, if a franchisee operates as a legal entity (like a corporation or LLC), they face specific restrictions regarding the issuance or sale of securities. Clear Pest Pros requires that neither the legal entity nor any of its owners may issue or sell, or offer to issue or sell, any securities of the legal entity or an affiliate without first obtaining Clear Pest Pros's prior written consent. This consent is at Clear Pest Pros's sole discretion.
Additionally, the franchisee must comply with all of Clear Pest Pros's requirements and restrictions concerning the use of information about them. This means a franchisee cannot use information about Clear Pest Pros to promote the sale of securities without the franchisor's approval.
This provision gives Clear Pest Pros significant control over how a franchisee's legal entity is capitalized and prevents franchisees from raising capital in a way that could potentially harm the Clear Pest Pros brand or system. Prospective franchisees should carefully consider this restriction, especially if they anticipate needing to raise capital through the sale of securities in the future. It would be prudent to discuss potential scenarios with Clear Pest Pros during the due diligence process to understand their typical requirements and restrictions.