What is considered a 'controlling interest' for Principal Owners in a Healthsource Chiropractic franchise, as defined in Exhibit 2?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- e. If you propose to Transfer this Agreement, the Franchise or its assets, or any Interest, or if any of your Principal Owners proposes to Transfer a controlling Interest in you or make a Transfer that is one of a series of Transfers which taken together would constitute the Transfer of a controlling Interest in you, then you must apply to us for approval of such Transfer sign such forms and procedures as we have in effect at that time, the person or entity to whom you wish to make the Transfer ("Proposed New Owner") must apply to us for acceptance as a franchisee, and you must submit to us all of the information and documentation required for us to evaluate the proposed Transfer and to confirm that all of the conditions set forth in Section 14.5 below have been, or will be, satisfied.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, a 'controlling interest' for Principal Owners is referenced within the context of transferring ownership. Specifically, if a Principal Owner proposes to transfer a controlling interest in the franchise, or make a transfer that is one of a series of transfers which taken together would constitute the transfer of a controlling interest, the franchisee must apply to Healthsource Chiropractic for approval.
This means that any transfer of ownership that gives a new owner the ability to control the franchise's operations or decisions requires franchisor approval. This is a common provision in franchise agreements, as franchisors want to ensure that new owners meet their standards and are capable of running the business effectively. The FDD does not explicitly define what percentage of ownership constitutes a 'controlling interest.'
Prospective Healthsource Chiropractic franchisees should seek clarification from the franchisor regarding the specific percentage or criteria that define a 'controlling interest' to fully understand the implications for future ownership changes or transfers. Understanding this threshold is crucial for planning any potential exit strategies or changes in ownership structure during the franchise term. This information would likely be found in the full franchise agreement or related exhibits.