What is the Coffee News franchisee's obligation regarding notification to the Franchisor if the franchisee is a corporation or partnership and there is a change in stock ownership or partnership interest?
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 a 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 change that, when combined with prior changes, results in a change of the person or persons having control of the entity is considered a transfer. Such a transfer is subject to additional provisions outlined in paragraph 10 of the agreement and its subparagraphs, which likely detail the procedures and requirements for such transfers.
This notification requirement allows Coffee News to monitor and control who has ownership and control within its franchise system. This is a fairly standard practice in franchising, as franchisors want to ensure that those operating and controlling their branded businesses meet their standards and qualifications. A prospective franchisee should carefully review paragraph 10 and its subparagraphs to fully understand the requirements and potential restrictions on ownership changes.