What statement must be conspicuously endorsed on each stock certificate related to a Mr. Sandless franchise?

According to the 2025 Mr. Sandless Franchise Disclosure Document, if a franchisee operates as a corporation, each stock certificate must have a conspicuous endorsement. This endorsement, in a format satisfactory to Mr. Sandless, must state that the stock is held subject to all assignment restrictions outlined in the Franchise Agreement and that any further assignment or transfer is also subject to these restrictions. Additionally, if the franchisee is a corporation, the shareholders' agreement, or if a limited liability company, the operating agreement, must also restrict the transfer of interests to third parties.

This requirement ensures that Mr. Sandless maintains control over who becomes a franchisee and that any transfer of ownership complies with the terms of the Franchise Agreement. This is a common practice in franchising to protect the brand and maintain consistency across all franchise locations. By restricting the transfer of stock, Mr. Sandless can prevent unauthorized parties from gaining control of a franchise without their approval.

For a prospective Mr. Sandless franchisee, this means that if they choose to operate their franchise through a corporation or limited liability company, they must ensure that all stock certificates and governing documents include the necessary restrictions on transfer. This may require consulting with legal counsel to ensure compliance with the Franchise Agreement and applicable laws. Failure to comply with these requirements could result in a breach of the Franchise Agreement and potential termination of the franchise.