What obligation does a Healthsource Chiropractic franchisee have regarding providing evidence of ownership interests?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.2 Interests in Franchise Owner; Reference to Exhibit 2. You and each Principal Owner represent, warrant, and agree that all "Interests" in Franchise Owner are owned in the amount and manner described in Exhibit 2. No Interests in Franchise Owner will, during the Term of this Agreement, be "public" securities (i.e., securities that require, for their issuance, registration with any state or federal authority). (An "Interest" is defined to mean any shares, units, membership interests, or partnership interests of Franchise Owner and any other equitable or legal right in any of Franchise Owner's stock, revenues, profits, rights, or assets. When referring to Franchise Owner's rights or assets, an "Interest" means this Agreement, Franchise Owner's rights under and interest in this Agreement, any HealthSource Chiropractic franchise, and the revenues, profits or assets of any HealthSource Chiropractic franchise.) You and each Principal Owner also represent, warrant, and agree that no Principal Owner's Interest has been given as security for any obligation (i.e., no one has a lien on or security interest in a Principal Owner's Interest), and that no change will be made in the ownership of an Interest other than as expressly permitted by this Agreement or as we may otherwise approve in writing. You and each Principal Owner agree to furnish us with such evidence as we may request from time to time to assure ourselves that the Interests of Franchise Owner and each of your Principal Owners remain as permitted by this Agreement, including a list of all persons or entities owning any Interest, as defined above.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, franchisees and their principal owners must represent and warrant that all ownership interests in the franchise are held as described in Exhibit 2 of the Franchise Agreement. These interests cannot be "public" securities requiring registration with state or federal authorities. An "Interest" includes any shares, units, membership interests, or partnership interests in the Franchise Owner, as well as any legal or equitable right to the Franchise Owner's stock, revenues, profits, rights, or assets, including the Franchise Agreement itself.
Furthermore, franchisees and principal owners must confirm that no principal owner's interest has been used as security for any obligation, meaning no liens or security interests exist on their ownership stake. Any changes in ownership require express permission within the agreement or written approval from Healthsource Chiropractic.
Healthsource Chiropractic retains the right to request evidence to ensure that the ownership interests of the franchisee and principal owners remain compliant with the agreement. This includes providing a list of all individuals or entities holding any interest in the franchise, as defined in the agreement. This allows Healthsource Chiropractic to maintain oversight and control over the ownership structure of its franchises, ensuring compliance with the franchise agreement and protecting the brand's integrity.
In practical terms, a prospective Healthsource Chiropractic franchisee should be prepared to disclose all ownership details and be ready to provide documentation upon request by Healthsource Chiropractic. Any planned changes in ownership must be communicated and approved to avoid violating the agreement.