When transferring the Monicals Pizza franchise agreement to an entity, what must the franchisee represent and warrant regarding the holders of legal or beneficial interests?

According to Monicals Pizza's 2025 Franchise Disclosure Document, if a franchisee desires to transfer the franchise agreement to an entity, they must represent and warrant that the individuals identified in Exhibit 5 as Holders of a Legal or Beneficial Interest are the sole holders of all the legal or beneficial interests (in the stated proportions) of the entity to which the agreement will be transferred. This means the franchisee must guarantee that the ownership structure of the new entity matches what is disclosed in Exhibit 5 of the franchise agreement.

This requirement ensures that Monicals Pizza knows exactly who owns and controls the franchise, even after a transfer to a business entity. It prevents hidden ownership or control by individuals not vetted or approved by the franchisor. Exhibit 5 likely lists the names, addresses, and ownership percentages of all individuals with a significant stake in the franchise.

For a prospective Monicals Pizza franchisee, this means carefully documenting and disclosing all legal and beneficial owners of the entity that will operate the franchise. Any changes in ownership must be accurately reflected and approved by Monicals Pizza. Failure to comply with this requirement could lead to the rejection of the transfer or even termination of the franchise agreement. Franchisees should consult with legal counsel to ensure full compliance with these transfer requirements.