Is the issuance of additional securities by a Focalpoint Coaching franchisee considered a transfer under the franchise agreement?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
In this Agreement, the term "transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition. An assignment, sale, gift, or other disposition includes the following events:
- (a) transfer of ownership of capital stock, a partnership or membership interest, or another form of ownership interest;
- (b) merger or consolidation or issuance of additional securities or other forms of ownership interest;
- (c) any sale of a security convertible to an ownership interest;
- (d) transfer of an interest in Franchisee, this Agreement, the Franchised Business or all or substantially all of its assets, or Franchisee's owners in a divorce, insolvency, or entity dissolution proceeding or otherwise by operation of law;
- (e) if Franchisee, one of Franchisee's owners, or an owner of one of Franchisee's owners dies, a transfer of an interest in Franchisee, this Agreement, the Franchised Business or substantially all of its assets, or Franchisee's owner by will, declaration of or transfer in trust, or under the laws of intestate succession; or
- (f) pledge of this Agreement (to someone other than Franchisor) or of an ownership interest in Franchisee or Franchisee's owners as security, foreclosure upon the Franchised Business, or Franchisee's transfer, surrender, or loss of the Office's possession, control, or Franchised Business' management. Franchisee may grant a security interest (including a purchase money security interest) in the Franchised Business' assets (not including this Agreement) to a lender that finances Franchisee's acquisition, development, and/or operation of the Franchised Business without having to obtain Franchisor's prior written approval as long as Franchisee gives Franchisor ten (10) days' prior written notice.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the issuance of additional securities or other forms of ownership interest by a franchisee is considered a transfer under the franchise agreement. The FDD defines 'transfer' broadly to include both direct and indirect dispositions of ownership.
This definition means that if a Focalpoint Coaching franchisee decides to issue new stock in their business, or any other form of ownership interest, it is legally regarded as a transfer of ownership. As such, it triggers the transfer provisions outlined in the franchise agreement. The franchisee must adhere to the conditions for approval of transfer as detailed in Section 12.C of the agreement.
For a prospective Focalpoint Coaching franchisee, this is an important consideration for future business planning. If the franchisee anticipates needing to raise capital through the issuance of additional securities, they must be aware that this action requires franchisor approval and may involve transfer fees or other conditions. Failing to comply with these transfer provisions could result in a breach of the franchise agreement.
It is also important to note that the term 'transfer' includes not only the issuance of additional securities, but also other events such as the transfer of ownership, merger, consolidation, or sale of a security convertible to an ownership interest. This comprehensive definition ensures that any significant change in ownership or control of the franchise is subject to the franchisor's oversight and approval.