What is the Coffee News franchisee's obligation regarding notification of changes in ownership?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.3 Ownership Changes.
If Franchisee is a corporation or partnership, Franchisee agrees to notify Franchisor of any change in stock ownership or partnership interest in Franchisee while this Agreement is in effect.
Any such change which, together with all prior changes, results in a change of the person or persons having control of the entity shall be a transfer subject to the provisions of this paragraph 10 and its subparagraphs.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, if the franchisee is a corporation or partnership, they must notify Coffee News of any change in stock ownership or partnership interest while the Franchise Agreement is in effect.
Furthermore, any single change, or accumulation of changes, that results in a change of the person or persons having control of the entity is considered a transfer. This transfer is subject to the provisions outlined in paragraph 10 of the agreement and its subparagraphs, which likely detail the procedures and requirements for transferring ownership.
This notification requirement allows Coffee News to maintain oversight of who controls its franchises and ensures that any significant changes in ownership are reviewed and approved by the franchisor. This is a fairly standard clause in franchise agreements, as franchisors want to ensure that new controlling parties meet their standards and are capable of operating the franchise successfully. Prospective franchisees should carefully review paragraph 10 and its subparagraphs to fully understand the requirements and restrictions related to transferring ownership.