In the context of the Marble Slab Creamery Franchise Agreement, what constitutes an 'Affiliate' of the Franchisee, particularly regarding equity or voting control?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
"Affiliate" when used herein in connection with Franchisor or Franchisee, includes each person or Entity which directly, or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Franchisor or Franchisee, as applicable. Without limiting the foregoing, the term "Affiliate" when used herein in connection with Franchisee includes any Entity 10% or more of whose Equity or voting control, is held by person(s) or Entities who, jointly or severally, hold 10% or more of the Equity or voting control of Franchisee. For purposes of this definition, control of a person or Entity means the power, direct or indirect, to direct or cause the direction of the management and policies of such person or Entity whether by contract or otherwise. Notwithstanding the foregoing definition, if Franchisor or its Affiliate has any ownership interest in Franchisee, the term "Affiliate" shall not include or refer to the Franchisor or that Affiliate, and no obligation or restriction upon an "Affiliate" of Franchisee, shall bind Franchisor, or said Affiliate or their respective direct and indirect parents or subsidiaries, or their respective officers, directors, or managers.
Source: Item 22 — CONTRACTS (FDD page 101)
What This Means (2025 FDD)
According to the 2025 Marble Slab Creamery Franchise Disclosure Document, an 'Affiliate' of the franchisee is defined broadly to include any entity or person that directly or indirectly controls, is controlled by, or is under common control with the franchisee. This control can be exerted through one or more intermediaries.
Specifically, the definition extends to any entity where 10% or more of its equity or voting control is held by individuals or entities who also hold 10% or more of the equity or voting control of the franchisee. This means that if a franchisee has a significant ownership stake in another company, or vice versa, that other company could be considered an affiliate under the terms of the franchise agreement. Control is defined as the power to direct the management and policies of a person or entity, whether through contractual agreements or other means.
However, there is an exception: if Marble Slab Creamery or its affiliate has any ownership interest in the franchisee, the term 'Affiliate' does not include Marble Slab Creamery or that affiliate. Furthermore, any obligations or restrictions placed upon an 'Affiliate' of the franchisee do not bind Marble Slab Creamery, its affiliates, or their respective parents, subsidiaries, officers, directors, or managers. This distinction clarifies that the franchisor's obligations are separate from those of the franchisee's affiliates.