Does Crown Gold Franchising have to approve the new Principal Executive?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that the person designated as the "Principal Executive" on the Summary Page is the executive primarily responsible for the Business and has decision-making authority on behalf of Franchisee.
The Principal Executive must have at least 10% ownership interest in Franchisee.
The Principal Executive does not have to serve as a day-today general manager of the Business, but the Principal Executive must devote substantial time and attention to the Business.
If the Principal Executive dies, becomes incapacitated, transfers his/her interest in Franchisee, or otherwise ceases to be the executive primarily responsible for the Business, Franchisee shall promptly designate a new Principal Executive, subject to Crown Gold Franchising's reasonable approval.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if the Principal Executive dies, becomes incapacitated, transfers their interest, or otherwise ceases to be the executive primarily responsible for the business, the franchisee must promptly designate a new Principal Executive. This new Principal Executive is subject to Crown Gold Franchising's reasonable approval.
This means that while the franchisee has the right to choose a new Principal Executive, Crown Gold Exchange retains the right to ensure that the individual meets their standards. This approval process likely involves assessing the individual's qualifications, experience, and suitability for the role.
For a prospective franchisee, this clause highlights the importance of carefully selecting a Principal Executive who is likely to be approved by Crown Gold Exchange. It also underscores the need to have a succession plan in place in case the original Principal Executive is no longer able to fulfill their duties. The term 'reasonable approval' suggests that Crown Gold Exchange cannot arbitrarily reject a candidate, but they do have the right to ensure that the new Principal Executive is capable of effectively managing the Crown Gold Exchange business.