Is Afuri Ramen Dumpling's consent to a transfer a subjective determination?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
e believe based upon a review of the transferee's operational and business plans that the transferee's business operations might not be beneficial on a cash flow or financial basis.
- 7.1.3 We need not consent to any transfer to a competitor of ours.
- 7.1.4 We enter this Agreement, in part, in reliance upon the individual or collective character, skill, attitude, business ability and financial capacity of you (or your shareholders, members or partners, if you are a corporation, limited liability company, partnership or other entity).
- 7.1.5 You recognize that there are many subjective factors that comprise the process by which we select a suitable franchise owner. Our consent to a transfer by you will remain a subjective determination and will include, but not be limited to the following conditions. Before the effective date of a transfer we approve:
- A. The transferee must assume your Franchise obligations. You will remain bound by your covenants in this Agreement to not disclose Confidential Information and to not compete with us or our franchisees.
- B. You will pay all ascertained or liquidated debts concerning the Franchise.
- C. You may not be in breach of this Agreement or any other agreement between the parties. Our consent to the transfer will not constitute a waiver of any claims we may have against you.
- D. The transferee will pay for and complete to our exclusive satisfaction the training programs we then require of new franchisees or otherwise show to our satisfaction sufficient ability to successfully operate the Franchise.
- E. You or the transferee will pay a Transfer Fee according to our then-current Transfer Fee Schedule. This fee will reimburse us for our reasonable legal, accounting, credit check, and
investigation expenses that result from the transfer, as well as the mandatory training program for the transferee. The current Transfer Fee is $30,000.
- F. You or the transferee will refurbish, remodel, and replace the Franchise Premises, fixtures, equipment, delivery vehicles (if applicable), and signage to conform to our then-current Operations Man
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the franchisor's consent to a transfer of the franchise is indeed a subjective determination. Afuri Ramen Dumpling emphasizes that the initial agreement is based on the franchisee's individual or collective character, skills, attitude, business ability, and financial capacity. The document also acknowledges that selecting a suitable franchise owner involves many subjective factors.
Afuri Ramen Dumpling outlines several conditions that must be met before a transfer is approved. These include the transferee assuming all franchise obligations, the franchisee remaining bound by confidentiality and non-compete agreements, and the payment of all outstanding debts related to the franchise. Additionally, the franchisee must not be in breach of any agreements with Afuri Ramen Dumpling, and the transferee must complete the required training programs to the franchisor's satisfaction or demonstrate sufficient ability to operate the franchise successfully.
Furthermore, either the franchisee or the transferee is responsible for paying a transfer fee, which is currently $30,000, to cover legal, accounting, credit check, and investigation expenses, as well as the transferee's mandatory training program. The franchise premises must also be refurbished and remodeled to meet Afuri Ramen Dumpling's current standards. If Afuri Ramen Dumpling obtains the transferee, a 10% commission on the gross transfer price (excluding real property) is required. Finally, the transferee must execute all documents required of new franchisees.
These conditions highlight that Afuri Ramen Dumpling retains significant control over who can become a franchisee, ensuring that any new owner aligns with their standards and has the capacity to maintain the brand's reputation. The subjective nature of this determination, combined with the various financial obligations, means that franchisees need to carefully consider these factors when planning for a potential transfer.