What legend must be printed on the face of certificates representing voting securities for a Cool Binz franchisee corporation?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
The legal entity, if a corporation, shall maintain stop transfer instructions against the transfer on its records of any securities with voting rights subject to the restrictions of this Section and shall cause all certificates representing outstanding voting securities to be surrendered for reissuance and cause all certificates for voting securities in the future to be issued with this legend printed conspicuously upon the face of each certificate: "The transfer of this certificate and the shares it represents is subject to the terms and conditions of a certain Franchise Agreement with Cool Binz International, LLC.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to the 2025 Cool Binz Franchise Disclosure Document, if the franchisee is a corporation, it must include a specific legend on all certificates representing voting securities. This legend must be printed conspicuously on the face of each certificate and state: "The transfer of this certificate and the shares it represents is subject to the terms and conditions of a certain Franchise Agreement with Cool Binz International, LLC."
This requirement ensures that any potential transfer of ownership or voting rights within the franchisee corporation is explicitly tied to the terms of the franchise agreement. This protects Cool Binz by ensuring that new shareholders are aware of and bound by the existing franchise agreement, maintaining control over who can become involved in a Cool Binz franchise and preventing unauthorized transfers that could violate the agreement.
For a prospective Cool Binz franchisee, this means that if they choose to operate their franchise through a corporation, they must adhere to this requirement when issuing stock certificates. This is a standard practice in franchising to maintain brand consistency and control. Franchisees should ensure they understand the implications of this restriction on the transferability of their company's shares and consult with legal counsel to ensure compliance.