What does 'Control or Controlling Interest' mean in the context of the Jersey Mikes franchise agreement?

According to Jersey Mike's 2025 Franchise Disclosure Document, 'Control or Controlling Interest' refers to the power to direct the management and policies of an entity. This power can be exerted directly or indirectly, through various means such as ownership of voting securities, contractual agreements, or by operation of law.

For a prospective Jersey Mike's franchisee, understanding this definition is crucial because it impacts the transferability of ownership interests. The franchise agreement stipulates that transferring a controlling interest is subject to certain conditions, including the franchisor's right of first refusal. This means that if a franchisee wishes to sell their interest in the franchise, Jersey Mike's has the option to purchase that interest on the same terms offered by a third party.

Furthermore, the definition of 'Affiliate' also relies on the concept of control, meaning an entity that controls, is controlled by, or is under common control with another entity. This has implications for the franchisee's relationships with other businesses and individuals, as these affiliations could potentially affect the franchise agreement. Therefore, franchisees need to be aware of how their business dealings and ownership structures might be interpreted in light of this definition.

In essence, Jersey Mike's retains significant oversight regarding who ultimately controls a franchise location to maintain brand consistency and operational standards. Franchisees should carefully consider these stipulations and seek legal counsel to fully understand their rights and obligations related to ownership transfers and control.