How does the Nothing Bundt Cakes agreement define 'Owner', 'owner', or 'principal'?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. We and our principals and affiliates have expended a considerable amount of time, effort, and money to develop a system for the establishment and operation of gourmet bakeries offering and selling specialty bundt cakes, other food items, and retail merchandise (the "Products") under the "Nothing Bundt Cakes®" mark (each a "Bakery").
If your owners establish a new legal entity to operate one or more of the Nothing Bundt Cakes® Bakeries to be developed pursuant to this Rider and that new legal entity's ownership is completely identical to your ownership, that legal entity automatically will be considered an "Approved Affiliate" without further action. However, if the new legal entity's ownership is not completely identical to your ownership, you first must seek our approval for that new entity to develop and operate the proposed Bakery as an Approved Affiliate. We may refuse any such request if you and/or your owners do not (a) own and control at least eighty percent (80%) of the new entity's ownership interests and (b) have the authority to exercise voting and management control of the Bakery proposed to be owned by the new entity.
Except as otherwise approved in writing by the Franchisor, the prospective Franchisee shall not for himself/herself, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation or limited liability company, own, maintain, engage in, lend money to, extend credit to, have controlling interest in, or be employed as an officer, director, executive, or principal of any bakery, except as stipulated in Item 8 below.
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
Based on the 2025 Nothing Bundt Cakes Franchise Disclosure Document, the term 'principals' is referenced in the context of the franchisor's activities in developing the Nothing Bundt Cakes system. Specifically, the FDD states that 'We and our principals and affiliates have expended a considerable amount of time, effort, and money to develop a system for the establishment and operation of gourmet bakeries...' This indicates that the franchisor's principals are individuals involved in the development and management of the Nothing Bundt Cakes brand and its operational systems.
Additionally, the term 'owners' appears in relation to the franchisee and their potential affiliates. If a franchisee establishes a new legal entity to operate Nothing Bundt Cakes bakeries, and the ownership of that entity is identical to the franchisee's, it's considered an 'Approved Affiliate.' However, if the ownership isn't identical, the franchisor's approval is required. Nothing Bundt Cakes may refuse approval if the franchisee and/or their owners do not own and control at least 80% of the new entity's ownership interests and have the authority to exercise voting and management control of the bakery.
Furthermore, the term 'principal' is used in the context of a prospective franchisee potentially being employed as an officer, director, executive, or principal of any bakery that competes with Nothing Bundt Cakes. This suggests that a 'principal' is someone in a leadership or controlling position within a competing bakery business. Therefore, the definition of 'owner' or 'principal' is tied to control, management, and a significant ownership stake in the context of both the franchisor's organization and the franchisee's operation, as well as restrictions on involvement with competing businesses.