What is considered a 'Controlled Entity' in the context of a Ledgers franchise transfer?

According to Ledgers's 2025 Franchise Disclosure Document, a "Controlled Entity" is defined as an entity where the franchisee is the beneficial owner of 100% of each class of voting ownership interest. This definition is important in the context of transferring a Ledgers franchise, as transfers to such entities are treated differently than transfers to other third parties.

Specifically, a transfer to a Controlled Entity does not trigger Ledgers's Right of First Refusal, which is a standard clause in many franchise agreements that gives the franchisor the first opportunity to buy back the franchise before it is sold to someone else. This can be a significant benefit for a franchisee who wishes to transfer the business to a wholly-owned entity for estate planning, tax, or liability purposes, as it avoids the potential delay and uncertainty of the franchisor exercising its right of first refusal.

However, the franchisee must still notify Ledgers in writing of the transfer, providing the name of the Controlled Entity and the names and addresses of all officers, directors, shareholders, members, partners, or similar persons, along with their respective ownership interests. Each of these individuals must also sign the then-current amendment and release forms or Franchisee Agreement as required by Ledgers. Importantly, Ledgers does not charge a transfer fee for transfers to a Controlled Entity, which can result in significant savings compared to a standard transfer.