What agreement must Dryject stockholders execute regarding the transfer of securities?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) In the event You or Your successor is not an individual, You agree and acknowledge as follows:
- (i) The Articles of Incorporation (or other corporate charter pursuant to which You were formed) and the Bylaws or Operating Agreement (or regulations or other instrument for the governance of the entity), or the Partnership Agreement, or other instruments pursuant to which You were created, reflects that the issuance and transfer of voting stock or other ownership interest therein ("securities") is restricted by the terms of this Agreement. You shall furnish Us at the time of execution of this Agreement or of assignment to the corporation, limited liability company, partnership or other entity, an agreement executed by all stockholders, partners, members and other owners of any equity interest in You, stating that none of such entities will sell, assign or transfer voluntarily or by operation of law any securities of Franchisee to any other entity, other than existing stockholders or partners to the extent permitted hereunder, without Our prior written consent. All securities issued by You will bear a legend in substantially the following form, which shall be printed legibly and conspicuously thereon:
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 Dryject FDD, if the franchisee is not an individual, the franchisee must furnish Dryject with an agreement executed by all stockholders, partners, members, and other owners of any equity interest. This agreement confirms that none of these entities will sell, assign, or transfer any securities of the franchisee to any other entity without Dryject's prior written consent. The only exception is transfers to existing stockholders or partners, to the extent permitted under the agreement.
This requirement ensures that Dryject maintains control over who owns and operates its franchises. By requiring this agreement, Dryject can prevent unwanted or unqualified individuals from gaining ownership in a franchise without their approval. This protects the brand's reputation and the interests of other franchisees.
Furthermore, all securities issued by the franchisee must bear a legend indicating that the transfer of the securities is restricted by the terms of the Franchise Agreement. This legend must be printed legibly and conspicuously on the securities. This serves as a constant reminder to potential buyers that the securities cannot be freely transferred without Dryject's consent.
This provision is typical in franchising, as franchisors want to ensure that all owners meet their standards and are committed to the success of the franchise system. A prospective franchisee should carefully review the terms of the agreement to understand the specific restrictions on transferring securities and the process for obtaining Dryject's consent.