What authority must the Operating Principal of a Red Wagon Club franchise have?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
Ownership of an RWC Business is not a passive investment. You must identify one of your owners who is a natural person with at least a 51% ownership interest and voting power in you, with the authority to take legally binding actions on your behalf, to act as your "Operating Principal." We must approve the Operating Principal prior to such individual having any involvement in your RWC Business. If your Operating Principal ceases to own at least a 51% ownership interest and voting interest in you, your Operating Principal resigns or otherwise indicates to us or to you that he or she wishes to cease acting as Operating Principal, or we disapprove of your Operating Principal, you must recruit a new Operating Principal within 30 days of the change in ownership or disapproval and submit to us all documents we request regarding the new Operating Principal for our review and approval. Your Operating Principal must, at all times, have direct, day-to-day, full-time supervision of your RWC Business. Your Operating Principal must attend all scheduled meetings and required trainings conducted by us for the purpose of further instruction, education, or informing you on topics involving the supervision of your RWC Business.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED BUSINESS (FDD page 37)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, if a franchisee is not a natural person, they must designate an Operating Principal. This individual must be a natural person who possesses at least 51% ownership interest and voting power within the franchise entity.
The Operating Principal must have the authority to take legally binding actions on behalf of the franchisee. Red Wagon Club requires approval of the Operating Principal before they can be involved in the RWC Business. If the Operating Principal's ownership falls below 51%, they resign, or Red Wagon Club disapproves of them, the franchisee has 30 days to find a replacement.
The Operating Principal is responsible for the direct, day-to-day, full-time supervision of the Red Wagon Club business. They must also attend all scheduled meetings and required training sessions conducted by Red Wagon Club. If the Operating Principal cannot supervise the business full-time, a Designated Manager who has completed the required training programs can be appointed, though the Operating Partner must manage the RWC Business until a replacement Designated Manager is found.