Under what condition might Marble Slab Creamery waive the equity requirement for financing the restaurant?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
5.1 A Franchisee which is a corporation will comply, except as otherwise approved in writing by Franchisor, with the following requirements throughout the term of this Agreement:
5.1.1 Franchisee will furnish Franchisor with its Articles of Incorporation, By-laws, other governing documents, any other 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.
5.2 A Franchisee which is a limited liability company will comply, except as otherwise approved in writing by Franchisor, with the following requirements throughout the term of this Agreement:
5.2.1 Franchisee will furnish Franchisor with its Articles of Organization, Certificate of Formation, Operating Agreement, Limited Liability Company Agreement, other governing documents, any other documents Franchisor may reasonably request, and any amendments thereto.
5.2.2 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.
5.2.3 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.
Source: Item 22 — CONTRACTS (FDD page 101)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Marble Slab Creamery outlines specific financial requirements for franchisees that are corporations or limited liability companies. According to Item 22, sections 5.1 and 5.2, these franchisees must adhere to certain equity-related stipulations unless Marble Slab Creamery provides written approval to waive them.
For corporate franchisees, Marble Slab Creamery requires maintaining stop transfer instructions against the transfer of any equity securities on its records. Additionally, any securities issued must bear a printed legend, prescribed by Marble Slab Creamery, indicating that the transfer of such stock is subject to the terms and conditions of the Franchise Agreement. Similarly, limited liability company franchisees must also maintain stop transfer instructions against equity security transfers.
In both cases, the requirement to maintain stop transfer instructions on equity securities can be waived if Marble Slab Creamery provides written approval. This suggests that while these equity requirements are standard, Marble Slab Creamery retains the discretion to make exceptions on a case-by-case basis. A prospective franchisee should discuss the specific conditions under which such a waiver might be granted during their due diligence process.