Does Afuri Ramen Dumpling require approval of all transfers by a franchisee?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
to | | | | this Item. |
| Provision | Section in Franchise Agreement ("FA") | Summary |
|---|---|---|
| i. Franchisee's obligations on termination or nonrenewal. | FA Section 6.5 & 6.8 | De-identification, return of manuals, release of phone numbers and listings, de identification of your franchise equipment and premises, payment of sums owed, confidentiality, and non competition. |
| j. Assignment of contract by | FA Section 7.1 | There are no restrictions on our |
| franchisor | right to transfer. | |
| k. "Transfer" by franchisee – defined | FA Section 7.1 | Restrictions apply if you sell, transfer, assign, encumber, give, lease, or sublease (collectively called "transfer") the whole or any part of the franchise agreement, substantial assets of the franchise, or ownership or control of you. |
| l. Franchisor's approval of | FA Section 7.1 | We have the right to approve all |
| transfer by franchisee | transfers. | |
| m. Conditions for franchisor approval of transfer | FA Section 7.1 | The transferee must qualify as a franchisee, assume your obligations, and successfully pay for and complete the mandatory training. You may not be in default, must release us, and you or the transferee must pay the Transfer Fee. |
| n. Franchisor's right of first refusal to acquire franchisee's business | FA Section 7.3 | If you receive an offer, we will have the right to purchase on the same terms and conditions as offered to you, 30-day notice and right to decide. |
| o. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 40–45)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, Afuri Ramen Dumpling retains the right to approve all transfers by a franchisee. This means that if a franchisee wants to sell their franchise, transfer ownership, or sublease the business, they must first obtain approval from Afuri Ramen Dumpling. This provision is common in franchising, as it allows the franchisor to maintain control over who operates under their brand name.
Specifically, the FDD outlines conditions that must be met for Afuri Ramen Dumpling to approve a transfer. The potential new franchisee must meet Afuri Ramen Dumpling's qualifications, agree to take on all of the existing franchisee's obligations, and successfully complete the mandatory training program. Additionally, the current franchisee must not be in default of the franchise agreement, must release Afuri Ramen Dumpling from any claims, and either the current or new franchisee must pay a transfer fee.
Afuri Ramen Dumpling also has the right of first refusal to purchase the franchise business if the franchisee receives an offer from a third party. This means that before a franchisee can sell to someone else, they must offer Afuri Ramen Dumpling the opportunity to buy the business on the same terms. This allows Afuri Ramen Dumpling to strategically repurchase locations if they choose. Franchisees should carefully consider these transfer conditions, as they can impact the ability to sell their business when they decide to exit the franchise system.