Who is required to execute the Owners Agreement (Attachment D) for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- (f) the transferee shall (if the transfer is of this Franchise Agreement), or you shall (if the transfer is of a controlling ownership interest in you or one of your owners), sign our then-current form of franchise agreement and related documents, (including, but not limited to, our then-current form of Owners Agreement) any and all of the provisions of which may differ materially from any and all of those contained in this Franchise Agreement, including the Royalty and the Marketing Fees; provided, however, that the term of the new franchise agreement signed will equal the remainder of the then-remaining term of this Franchise Agreement;
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, in the event of a transfer of the franchise agreement or a controlling ownership interest, the transferee or the current owner is required to sign the then-current form of the Owners Agreement. This agreement, as stated in Item 22, may differ materially from the original franchise agreement, potentially affecting the Royalty and Marketing Fees.
Specifically, if a franchisee seeks to transfer their Extreme Art Studio franchise to a new owner, that new owner (the transferee) must sign the current version of the Owners Agreement. Alternatively, if the current franchisee is not transferring the entire franchise but rather a controlling stake in their ownership, then the existing franchisee owners must sign the updated Owners Agreement. This ensures that Extreme Art Studio has a binding agreement with whoever ultimately controls and benefits from the franchise.
This requirement protects Extreme Art Studio by ensuring that all owners are bound by the most up-to-date terms and conditions, especially regarding key financial obligations like royalties and marketing fees. For a prospective franchisee, this highlights the importance of carefully reviewing the Owners Agreement during any transfer scenario, as its terms could significantly impact the financial viability and operational requirements of the Extreme Art Studio franchise.