What is the par value of each share of capital stock for Cost Cutters Family Hair Salon?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
If the FRANCHISEE is a corporation and desires to sell any part of its authorized capital stock to the public, then the FRANCHISEE will provide COST CUTTERS with a copy of the proposed offering circular or prospectus for its review prior to the time that the offering circular or prospectus is filed with any state securities commission or the Securities and Exchange Commission.
The shareholders of the FRANCHISEE who owned the capital stock of the FRANCHISEE prior to the public offering will, at all times, retain at least a fifty-one percent (51%) ownership of the issued and outstanding shares of stock of the FRANCHISEE.
COST CUTTERS will have the right to attend all "due diligence" meetings held in preparation for the offer to sell the FRANCHISEE'S capital stock to the public, and the FRANCHISEE will give COST CUTTERS at least five (5) business days prior written notice of such meetings.
The FRANCHISEE will not offer its capital stock by use of the name Cost Cutters® or any name deceptively similar thereto.
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the par value of each share of capital stock for Cost Cutters Family Hair Salon is not specified. The document does discuss the sale of capital stock to the public under certain conditions.
Specifically, if a franchisee is a corporation and wants to sell its capital stock to the public, it must provide Cost Cutters Family Hair Salon with a copy of the proposed offering circular or prospectus for review before filing it with any state securities commission or the Securities and Exchange Commission. The shareholders who owned the stock before the public offering must retain at least 51% ownership of the issued and outstanding shares. Cost Cutters Family Hair Salon has the right to attend all "due diligence" meetings related to the stock offering, with at least five business days' notice. The franchisee cannot use the name Cost Cutters® or any deceptively similar name to offer its capital stock.
Because the FDD does not state the par value, prospective franchisees should ask Cost Cutters Family Hair Salon directly about the par value of their capital stock during their due diligence. This information is essential for understanding the financial structure and potential equity implications of the franchise.