What legend must be printed on all outstanding certificates of ownership for a Fat Shack franchisee that is a business entity?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- c. The business entity shall maintain stop transfer instructions against the transfer of ownership on its records subject to the restrictions of this Agreement and shall have all outstanding certificates of ownership endorsed with the following legend printed conspicuously upon the face of each certificate:
The transfer of the shares represented by this certificate is subject to the terms and conditions of a certain Franchise Agreement with Fat Shack Inc..
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, if a franchisee is a business entity such as a corporation or LLC, all outstanding certificates of ownership must be endorsed with a specific legend. This requirement ensures that any potential transfer of ownership is subject to the terms and conditions of the Franchise Agreement.
The required legend is: "The transfer of the shares represented by this certificate is subject to the terms and conditions of a certain Franchise Agreement with Fat Shack Inc..". This legend must be printed conspicuously on the face of each certificate of ownership.
This measure protects Fat Shack by ensuring that any transfer of ownership within a franchisee's business entity adheres to the franchise agreement's stipulations, maintaining control over who operates a Fat Shack franchise. It also informs potential buyers of shares in a Fat Shack franchise entity that their ownership is subject to Fat Shack's franchise agreement, which is a common practice in franchising to maintain brand standards and control.