What voting power must the Operating Principal have in the Franchisee for Red Wagon Club?
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 of the franchisee must have at least 51% ownership interest and voting power in the franchisee entity. This individual must also have the authority to take legally binding actions on behalf of the franchisee. The franchisor, Red Wagon Club, retains the right to approve the Operating Principal.
If the Operating Principal ceases to hold at least 51% ownership and voting interest, resigns, indicates they wish to stop 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 submitted to accurately identify the new Operating Principal for review and approval by Red Wagon Club.
The Operating Principal is authorized to handle all matters with Red Wagon Club on the franchisee's behalf, and any decisions made by the Operating Principal are final and binding. Red Wagon Club is entitled to rely solely on the Operating Principal's decisions and will not be liable for actions based on those decisions. This ensures clear lines of communication and decision-making authority between the franchisee and Red Wagon Club.