How is the determination of a controlling ownership interest made in the case of a proposed transfer of an ownership interest in a Focalpoint Coaching franchise?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
References to a "controlling ownership interest" in Franchisee or one of Franchisee's owners (if an Entity) mean the percent of the voting shares or other voting rights that results from dividing one hundred percent (100%) of the ownership interests by the number of owners. In the case of a proposed transfer of an ownership interest in Franchisee or one of Franchisee's owners, the determination of whether a "controlling ownership interest" is involved must be made as of both immediately before and immediately after the proposed transfer to see if a "controlling ownership interest" will be transferred (because of the number of owners before the proposed transfer) or will be deemed to have been transferred (because of the number of owners after the proposed transfer).
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, determining whether a proposed transfer of ownership constitutes a transfer of a controlling interest involves assessing the ownership percentages both before and after the transfer. The FDD states that a "controlling ownership interest" is defined as the percentage of voting shares or other voting rights that results from dividing one hundred percent (100%) of the ownership interests by the number of owners. This calculation is crucial in determining whether the transfer requires franchisor approval beyond what is required for a non-controlling interest.
For a prospective Focalpoint Coaching franchisee, this means that any transfer of ownership must be carefully evaluated to determine if it shifts control. The determination must be made both immediately before and immediately after the proposed transfer. This is to account for scenarios where the number of owners changes due to the transfer, which could inadvertently result in a controlling interest being transferred.
This provision is important because the transfer of a controlling interest typically requires meeting more stringent conditions for approval by Focalpoint Coaching. These conditions are designed to ensure that the new controlling owner meets the franchisor's standards and that the transfer does not negatively impact the franchise system. Therefore, franchisees need to be diligent in assessing the implications of any proposed ownership transfer to ensure compliance with the franchise agreement and to avoid potential disputes with Focalpoint Coaching.