What signed authorization must an Ella Cafe franchisee provide to the franchisor before opening?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
2.6 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to Franchisor, in the form of Attachment 3.
2.4 Franchisee Control. Franchisee represents that Attachment 1 (i) identifies each owner, officer and director of Franchisee, and (ii) describes the nature and extent of each owner's interest in Franchisee.
If any information on Attachment 1 changes (which is not a Transfer), Franchisee shall notify Franchisor within 10 days.
- 2.5 Principal Executive. 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
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if the franchisee is an entity, each owner must sign a personal guaranty of the franchisee's obligations to Ella Cafe, using the form provided as Attachment 3. This requirement ensures that Ella Cafe has recourse to the personal assets of the owners should the franchisee entity fail to meet its financial or contractual obligations. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.
Furthermore, the franchisee must provide Attachment 1, which identifies each owner, officer, and director of the franchisee, and describes the nature and extent of each owner's interest in the franchisee. If any information on Attachment 1 changes (other than a Transfer), the franchisee must notify Ella Cafe within 10 days. This ensures that Ella Cafe has current information about the ownership and management structure of the franchise.
The franchisee must also designate a "Principal Executive" on the Summary Page, who is primarily responsible for the business and has decision-making authority. The Principal Executive must have at least a 10% ownership interest in the franchisee and must devote substantial time and attention to the business. If the Principal Executive dies, becomes incapacitated, transfers their interest, or otherwise ceases to be the executive primarily responsible, the franchisee must promptly designate a new Principal Executive, subject to Ella Cafe's reasonable approval. This ensures that there is always a responsible individual overseeing the Ella Cafe franchise.