What constitutes 'control' in the context of defining an 'Affiliate' of Costa Vida Fresh Mexican Grill?
Costa_Vida_Fresh_Mexican_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
The terms listed below have the meanings which follow them and include the plural as well as the singular. Other terms are defined elsewhere in this Agreement in the context in which they arise.
"Affiliate" – Any person or entity that directly or indirectly owns or controls the referenced party; that is directly or indirectly owned or controlled by the referenced party, or that is under common control with the referenced party. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise.
Source: Item 22 — CONTRACTS (FDD pages 66–67)
What This Means (2025 FDD)
According to Costa Vida Fresh Mexican Grill's 2025 Franchise Disclosure Document, the term 'Affiliate' is defined in relation to 'control'. Specifically, an 'Affiliate' is any person or entity that either directly or indirectly owns or controls the referenced party, is directly or indirectly owned or controlled by the referenced party, or is under common control with the referenced party.
The critical aspect of this definition lies in the meaning of 'control.' The FDD clarifies that 'control' means possessing the power to direct or cause the direction of the management and policies of an entity. This power can be exerted through various means, including ownership of voting securities or contractual agreements.
For a prospective Costa Vida Fresh Mexican Grill franchisee, this definition is important for several reasons. First, it clarifies the scope of relationships that could be considered 'affiliates,' which may have implications for various aspects of the franchise agreement, such as competitive restrictions or supplier relationships. Second, understanding the breadth of 'control' ensures that franchisees are aware of any potential conflicts of interest or obligations arising from their relationships with other entities. Finally, this definition helps franchisees understand the boundaries of their operational independence and the extent to which Costa Vida Fresh Mexican Grill can influence their business decisions through affiliated entities.