What must a Pump It Up franchisee do to reflect any permitted changes to ownership interests?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
You must maintain a current list of all of your owners, members or partners (and the percentage ownership of each owner, member or partner), and provide such a list to us upon our request of the same.
You must comply with Section 16.B prior to any change in ownership interests, and sign and deliver to us a revised Exhibit 4 to reflect any permitted changes to those ownership interests.
If you are an Entity, you must maintain stop-transfer instructions against the transfer on your records of any voting securities, membership interests or ownership interests.
If you are a publicly held corporation, these requirements will apply only to the stock owned by your shareholders who have an ownership interest in you in excess of 10%.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, if a franchisee's ownership interests change and the franchisor permits these changes, the franchisee must sign and deliver a revised Exhibit 4 to reflect those changes. Additionally, the franchisee must maintain a current list of all owners, members, or partners, including the percentage ownership of each, and provide this list to the franchisor upon request. If the franchisee is an entity, it must maintain stop-transfer instructions against the transfer on its records of any voting securities, membership interests, or ownership interests. However, if the franchisee is a publicly held corporation, these requirements apply only to stock owned by shareholders with an ownership interest exceeding 10%.
This requirement ensures that Pump It Up maintains accurate records of its franchisees' ownership structures. Exhibit 4 likely contains detailed information about the ownership of the franchise, and updating it ensures that the franchisor is aware of who controls and benefits from the franchise. The stop-transfer instructions prevent unauthorized transfers of ownership that could violate the franchise agreement.
For a prospective Pump It Up franchisee, this means that any changes in ownership must be properly documented and approved by the franchisor. Failure to comply with these requirements could result in a breach of the franchise agreement. Franchisees should be prepared to provide updated ownership information and ensure that their organizational documents reflect any changes. The 10% threshold for publicly held corporations provides some relief for larger companies with numerous shareholders, focusing the franchisor's oversight on significant ownership stakes.