If an Ella Cafe Developer intends to issue equity interests, what must they do?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
If Developer is a Business Entity and intends to issue equity interests in Developer, pursuant to a public or private offering, Developer must first obtain Franchisor's written consent, which consent will not be unreasonably withheld.
Developer must provide Franchisor for its review a copy of all offering materials (whether or not such materials are required by applicable securities laws) at least 60 days prior to such documents being filed with any government agency or distributed to investors.
Franchisor's review of the offering materials will be limited solely to the subject of the relationship between Developer and Franchisor.
No offering will imply (by use of the Marks or otherwise) that Franchisor is participating in an underwriting, issuance, or offering of the Business Entity's securities, and Franchisor's review of any offering will be limited to ensuring compliance with the terms of this Agreement.
Franchisor may condition its approval on satisfaction of any or all of the conditions set forth in Section 8.3. and on execution of an indemnification agreement, in a form prescribed by Franchisor, by Developer and any other participants in the offering.
For each proposed offering, Developer must pay Franchisor a retainer in an amount determined by Franchisor, which Franchisor will use to reimburse itself for the reasonable costs and expenses it incurs (including,
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if a Developer, operating as a Business Entity, plans to issue equity interests through a public or private offering, they must first secure written consent from Ella Cafe. This consent will not be unreasonably withheld.
Prior to filing documents with any government agency or distributing them to investors, the Developer must provide Ella Cafe with a copy of all offering materials for review at least 60 days in advance, regardless of whether these materials are required by securities laws. Ella Cafe's review will focus solely on the relationship between the Developer and Ella Cafe, ensuring compliance with the franchise agreement terms.
Ella Cafe stipulates that no offering should imply that Ella Cafe is participating in the underwriting, issuance, or offering of the Business Entity's securities. Ella Cafe may also require the Developer and other participants to execute an indemnification agreement in a form prescribed by Ella Cafe. Additionally, Ella Cafe may condition its approval on satisfaction of conditions outlined in Section 8.3 of the agreement. The Developer is responsible for paying Ella Cafe a retainer, the amount of which is determined by Ella Cafe, to cover reasonable costs and expenses, including attorneys' and accountants' fees, incurred during the review of the proposed offering.