Regarding the Focalpoint Coaching franchise, what must the franchisee's organizational documents recite concerning ownership interests?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Despite Subsection 12.C above, if Franchisee is fully complying with this Agreement, Franchisee may transfer this Agreement to a corporation or limited liability company which conducts no business other than the Franchised Business and, if applicable, other FocalPoint Franchised Businesses, in which Franchisee maintains management control, and of which Franchisee owns and controls one hundred percent (100%) of the equity and voting power of all issued and outstanding ownership interests, provided that all of the Franchised Business' assets are owned, and the Franchised Business' business is conducted, only by that single corporation or limited liability company. The corporation or limited liability company must expressly assume all of Franchisee's obligations under this Agreement. Transfers of ownership interests in the corporation or limited liability company are subject to the conditions of Subsection 12.C above that otherwise apply to non-controlling transfers. Franchisee agrees to remain personally liable under this Agreement as if the transfer to the corporation or limited liability company did not occur.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to the 2025 Focalpoint Coaching Franchise Disclosure Document, if a franchisee transfers their Franchise Agreement to a corporation or limited liability company, that entity must meet specific ownership and control requirements. The franchisee must maintain management control and own and control 100% of the equity and voting power of all issued and outstanding ownership interests in the corporation or LLC. Additionally, the entity can conduct no business other than the Focalpoint Coaching franchised business, and if applicable, other Focalpoint Coaching franchised businesses.
This requirement ensures that Focalpoint Coaching franchisees remain actively involved and in control of the day-to-day operations of their franchise, even if the business is operated through a separate legal entity. This protects the Focalpoint Coaching brand and ensures consistent quality and operational standards across all franchise locations. The corporation or LLC must also expressly assume all of the franchisee's obligations under the Franchise Agreement, and the franchisee remains personally liable as if the transfer did not occur.
Transfers of ownership interests in the corporation or limited liability company are subject to the same conditions that apply to non-controlling transfers, meaning that any changes in ownership must still be approved by Focalpoint Coaching. This provision allows a Focalpoint Coaching franchisee to incorporate their business for liability or tax purposes while ensuring that the franchisor maintains control over the franchise and its operations. Prospective franchisees should carefully consider these requirements when structuring their business and consult with legal and financial advisors to ensure compliance.