What are the consequences if Ledgers withholds approval of a Business Manager unreasonably?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
You must designate a Business Manager. If you are an individual, then you must serve as Business Manager. You must inform us in writing of the identity of your Business Manager, furnish information to us regarding the candidate's background, experience and credentials, and secure our advance written approval before you engage him or her. We will not unreasonably withhold or deny our approval. Your Business Manager must have complete decision-making authority with regard to your Franchised Business and must have authority to act on your behalf in all respects under the Franchise Agreement. Your Business Manager is the only individual with whom we will be required to communicate when we seek to communicate with you. Your Business Manager must complete the Initial Training Program to our satisfaction.
If you desire to designate a successor or replacement Business Manager, then you must notify us in writing; identify your proposed successor Business Manager and the reason that your predecessor Business Manager ceased to serve; furnish us with all information we may reasonably request regarding the proposed successor; and, obtain our advance written approval, which we will not unreasonably delay or deny.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 37–38)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, franchisees must designate a Business Manager to oversee the daily operations of their franchised business. If the franchisee is an individual, they must serve as the Business Manager. The franchisee must inform Ledgers in writing of the identity of their Business Manager, provide information regarding the candidate's background, experience, and credentials, and secure Ledgers' advance written approval before engaging them.
Ledgers states that it will not unreasonably withhold or deny its approval of a Business Manager. The document does not specify the consequences if Ledgers were to unreasonably withhold or deny approval. However, the Business Manager must have complete decision-making authority regarding the franchised business and must have the authority to act on the franchisee's behalf in all respects under the Franchise Agreement. The Business Manager is also the only individual with whom Ledgers is required to communicate when they seek to communicate with the franchisee. The Business Manager must also complete the Initial Training Program to Ledgers' satisfaction.
If a franchisee desires to designate a successor or replacement Business Manager, they must notify Ledgers in writing, identify the proposed successor Business Manager and the reason that their predecessor Business Manager ceased to serve, furnish Ledgers with all information they may reasonably request regarding the proposed successor, and obtain Ledgers' advance written approval, which Ledgers states they will not unreasonably delay or deny. Both the franchisee and any Business Manager must pass a background check. The Designated Manager is not required to have an equity interest in the franchisee, if it is an entity.
Because the FDD does not specify the consequences of Ledgers unreasonably withholding approval of a Business Manager, a prospective franchisee should seek clarification from Ledgers regarding the recourse available to a franchisee in such a situation. This could include legal remedies or specific performance requirements outlined in the Franchise Agreement.