For Red Wagon Club, what authority must the Operating Principal possess?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
- (5) Franchisee must identify one of its owners on Attachment A who is a natural person with at least a 51% ownership interest and voting power in Franchisee, with the authority to take legally binding actions on Franchisee's behalf, to act as its "Operating Principal." Franchisor reserves the right to approve the Operating Principal. In the event that Franchisee's Operating Principal ceases to own at least a 51% ownership interest and voting interest in Franchisee, Franchisee's Operating Principal resigns or otherwise indicates to Franchisor or to Franchisee that he or she wishes to cease acting as Operating Principal, or Franchisor disapproves of the Operating Principal, Franchisee must recruit a new Operating Principal within 30 days of the change in ownership or disapproval and deliver to Franchisor a revised Attachment A to accurately identify the Operating Principal for its review and approval;
- (6) Franchisee agrees that the Operating Principal is authorized to deal with Franchisor on Franchisee's behalf for all matters whatsoever that may arise with respect to this Agreement. Any decision made by the Operating Principal will be final and binding on Franchisee and Franchisor will be entitled to rely solely on the decision of the Operating Principal without discussing the matter with any other party. Franchisor will not be held liable for any actions based on any decision or actions of the Operating Principal; and
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, the Operating Principal must have the authority to take legally binding actions on behalf of the franchisee. The Operating Principal must be a natural person with at least 51% ownership interest and voting power in the franchise. Red Wagon Club reserves the right to approve the Operating Principal.
The Operating Principal is authorized to deal with Red Wagon Club on the franchisee's behalf for all matters related to the Franchise Agreement. Any decision made by the Operating Principal is considered final and binding, and Red Wagon Club is entitled to rely solely on those decisions without needing to consult with any other party. Red Wagon Club will not be held liable for any actions based on the Operating Principal's decisions or actions.
If the Operating Principal ceases to own at least a 51% ownership interest and voting interest, resigns, indicates they wish to cease acting as Operating Principal, or is disapproved by Red Wagon Club, the franchisee must recruit a new Operating Principal within 30 days. A revised Attachment A must be delivered to Red Wagon Club to accurately identify the new Operating Principal for review and approval. In the event of death or permanent disability of the Operating Principal, a replacement must be appointed within a reasonable time, not to exceed 30 days, who will have ownership interest and the authority to take legally binding actions on Franchisee's RWC Business' behalf.