Does the Mr. Sandless Franchise Grant agreement require personal supervision by the franchisee?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
ial changes to the terms of the written purchase offer shall constitute a new offer, and we shall again have the right of first refusal described herein.
21.6 Transfer to a Corporation or Limited Liability Company
If you are an individual or partnership, you have the right to assign your rights under this Agreement to a corporation or limited liability company. Such transfer shall not be subject to the conditions set forth in Section 23.3 of this Agreement, provided that the corporation or limited liability company complies with the following requirements:
- 21.6.1 The corporation or limited liability company must be newly organized and its activities confined to acting exclusively as a Mr. Sandless franchisee;
- 21.6.2 You are, and at all times remain, the owner of at least fifty-one percent (51%) of the outstanding shares of the corporation or a controlling interest in the limited liability company;
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, if a franchisee chooses to operate their Mr. Sandless business through a corporation or limited liability company, the franchisee must maintain at least 51% ownership of the company. This indicates a requirement for the franchisee to have a controlling interest and active involvement in the business.
Furthermore, all shareholders of the corporation or members/managers of the LLC must sign a Guaranty Agreement, which binds them to the terms of the Franchise Agreement and guarantees the franchisee's obligations. This suggests that Mr. Sandless wants to ensure that individuals involved in the ownership and management of the franchise are personally committed to upholding the agreement. The corporation or LLC's activities must be confined exclusively to operating the Mr. Sandless franchise.
Additionally, the Franchise Agreement stipulates that the corporation or LLC must adhere to the requirements set forth in the agreement relating to the management of the business. This clause reinforces the franchisor's control over how the franchise is operated, even when it's run through a separate legal entity. These stipulations ensure that the franchisee maintains a significant degree of personal supervision and control over the Mr. Sandless business, even if it is operated through a corporate entity.