In the Kidokinetics franchise agreement, what information regarding ownership interests must be provided by the franchisee?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
wer and have been duly authorized by Franchisee;
- 10.2.5. Copies of Franchisee's organizational documents, other governing documents, resolutions or consents of the governing board authorizing entry into and performance of this Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity interests in Franchisee, and any other documents as may be reasonably required by Franchisor will be furnished to Franchisor prior to the execution of this Agreement;
- 10.2.6. The ownership interests in Franchisee are accurately and completely described on Attachment D of this Agreement. Upon the occurrence of any change of ownership, Franchisee will immediately provide Franchisor with a copy of the updated list of all owners of the entity. Franchisee will make a list of its owners available to Franchisor at any time upon request;
- 10.2.7. Franchisee and, at Franchisor's request, each Principal, has provided Franchisor with the most recent financial statements and tax returns of Franchisee and such Principal. Such financial statements and tax returns shall present fairly the financial position of Franchisee and each Principal, as applicable, at the dates indicated therein and, with respect to Franchisee, the results of its operations and its cash flow for the years then ended. Franchisee will, at all times, maintain sufficient working capital to fulfill its obligations under this Agreement; and
- 10.2.8.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchisee must provide comprehensive information regarding ownership interests. Specifically, the ownership interests in the franchisee entity must be accurately and completely described on Attachment D of the Franchise Agreement. Furthermore, upon any change of ownership, the franchisee is obligated to immediately provide Kidokinetics with an updated list of all owners of the entity. Kidokinetics also requires that the franchisee make a list of its owners available to Kidokinetics at any time upon request.
Kidokinetics also requires copies of the franchisee's organizational documents, other governing documents, resolutions or consents of the governing board authorizing entry into and performance of the Franchise Agreement, and any certificates, buy-sell agreements or other documents restricting the sale or transfer of equity interests in the franchisee. These documents must be furnished to Kidokinetics before the execution of the Franchise Agreement.
For franchisees operating as a corporation or limited liability company, the by-laws or operating agreement must explicitly state that the issuance and assignment of any interest in the franchisee are restricted by Article 15 of the agreement. These documents must also state that the franchisee can conduct no business except the operation of a Kidokinetics Business pursuant to the terms of the Franchise Agreement, and that transfers of interests in the franchisee are subject to the terms of the Franchise Agreement governing transfers. Additionally, stock or member certificates will contain a legend indicating these restrictions.