How is capital contributed to the LLC when Marble Slab Creamery or its affiliate invests in a franchised Restaurant?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
We or an affiliate of ours will contribute capital to the LLC in proportion to our (or affiliate's) percentage interest in the LLC, along with the other investors. Our (or our affiliate's) percentage interest in the LLCs will vary and be determined on a case by case basis by negotiation between the parties, but we (and our affiliate) plan always to be the majority owner. Generally, we or our affiliate will control the business and affairs of the LLC, subject to our affiliate's right to delegate certain responsibilities to others. The LLC Operating Agreement permits the manager of the LLC to request each member to make additional capital contributions to the LLC. The members are not required to make additional capital contributions, but if a member does not contribute additional capital the other member(s) will have the right to do so and the non-contributing member's interest in the LLC will be diluted.
We or our affiliate's capital contribution will provide a portion of the capital required by the LLC to establish the franchised business, including initial franchise fees; site acquisition costs; construction or remodeling costs; equipment and fixtures; and the opening inventory and supplies required to operate the Restaurant.
No member will have a priority over any other member as to any distribution. LLC net profits and losses generally will be allocated to the members in accordance with their percentage interest in the LLC, except in certain cases. These cases are covered by special rules under the LLC Operating Agreement. The tax effect and allocations of profits and losses involve complicated matters and we urge you to review and discuss the LLC Operating Agreement in detail with your accountant and other financial advisors.
Source: Item 10 — FINANCING (FDD pages 52–53)
What This Means (2025 FDD)
According to Marble Slab Creamery's 2025 Franchise Disclosure Document, when Marble Slab Creamery or its affiliate invests in a franchised restaurant by acquiring interest in a limited liability company (LLC), they will contribute capital in proportion to their percentage interest in the LLC, alongside other investors. While the specific percentage interest will vary and is determined on a case-by-case basis through negotiation, Marble Slab Creamery plans to always be the majority owner. As the majority owner, Marble Slab Creamery or its affiliate generally controls the business and affairs of the LLC, but they have the right to delegate certain responsibilities to others.
The capital contributed by Marble Slab Creamery or its affiliate will cover a portion of the capital required to establish the franchised business. This includes the initial franchise fees, site acquisition costs, construction or remodeling costs, equipment and fixtures, and the opening inventory and supplies needed to operate the restaurant. The LLC Operating Agreement allows the manager of the LLC to request additional capital contributions from each member.
While members are not required to make these additional contributions, a member's failure to do so can result in the dilution of their interest in the LLC if other members contribute the necessary capital. The net profits and losses of the LLC are typically allocated to the members based on their percentage interest, although there are special cases outlined in the LLC Operating Agreement that may alter this allocation. The document advises prospective franchisees to carefully review the LLC Operating Agreement with their accountant and financial advisors to fully understand the tax implications and profit/loss allocations.