What is the definition of 'Equity securities' in the context of a Marble Slab Creamery franchise agreement?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
r documents Franchisor may reasonably request, and any amendments thereto.
- 5.1.2 Franchisee will confine its activities exclusively to operating the Restaurant and any other "MARBLE SLAB CREAMERY" restaurants owned and operated by Franchisee pursuant to a validly existing franchise agreement.
- 5.1.3 Franchisee will maintain stop transfer instructions against the transfer on its records of any Equity securities; and will issue no securities upon the face of which does not legibly and conspicuously appear a printed legend in the form reasonably prescribed by Franchisor stating that the transfer of such stock is subject to the terms and conditions of this Agreement.
- 5.1.4 Franchisee will maintain a current list of all owners of record and all beneficial owners of any class of voting securities or securities convertible into voting securities of Franchisee and will furnish the list to Franchisor upon request.
Source: Item 22 — CONTRACTS (FDD page 101)
What This Means (2025 FDD)
Based on the 2025 Marble Slab Creamery Franchise Disclosure Document, the term 'Equity securities' is not explicitly defined within the provided excerpts. However, the FDD does outline certain requirements related to equity securities if a franchisee is a corporation or a limited liability company.
Specifically, the franchise agreement mandates that franchisees maintain stop transfer instructions against the transfer of any equity securities on their records. This means that the franchisee must prevent the transfer of ownership (stock or membership interests) without the franchisor's consent. Additionally, any securities issued by the franchisee must include a legend stating that their transfer is subject to the terms and conditions of the franchise agreement. This ensures that potential buyers are aware of the restrictions on ownership transfer.
Furthermore, corporate franchisees must provide Marble Slab Creamery with their Articles of Incorporation, By-laws, and any other governing documents, including amendments. Similarly, limited liability company franchisees must furnish their Articles of Organization, Certificate of Formation, Operating Agreement, and any other relevant documents. Both types of franchisees must also maintain a current list of all owners of record and beneficial owners of any voting securities or securities convertible into voting securities, providing this list to the franchisor upon request. These requirements enable Marble Slab Creamery to maintain oversight and control over the ownership structure of its franchisees, ensuring compliance with the franchise agreement and protecting the brand's interests.
Since the term 'Equity securities' is not explicitly defined, prospective franchisees should seek clarification from Marble Slab Creamery regarding the precise scope and meaning of this term within the context of the franchise agreement. Understanding what constitutes equity securities is crucial for complying with the transfer restrictions and disclosure requirements outlined in the FDD.