Under what conditions can the Amorino Area Developer assign the Area Development Agreement?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
nd on behalf of Company, or otherwise subfranchise, share, divide or partition this Agreement, and nothing in this Agreement will be construed as granting Area Developer the right to do so.
7.3 Assignment by Area Developer
(a) This Agreement has been entered into by Company in reliance upon and in consideration of the singular personal skill, qualifications and trust and confidence reposed in Area Developer or, in the case of a corporate or partnership franchisee, the principal officers or partners thereof who will actively and substantially participate in the ownership and operation of the Franchised Business. Therefore, neither Area Developer's interest in this Agreement nor any of its rights or privileges shall be assigned or transferred, voluntarily or involuntarily, in whole or in part, by operation of law or otherwise, in any
manner, without the prior written consent of Company, which may be withheld for any reason or for no reason. Any attempted assignment or transfer without Company's consent shall be considered null and void.
- (b) Should Company not elect to exercise its said right of first refusal, or should such right of first refusal be inapplicable, as herein provided, Area Developer shall not have the right to submit a request for consent, and Company shall not be obligated to even entertain or consider such a request, unless Area Developer demonstrates that:
- (i)that the assignee (or the principal officers, shareholders, directors or general partners of the assignee in the case of a corporate or partnership assignee) demonstrate that they have the skills, qualifications and economic resources necessary, in Company's judgment, reasonably exercised, to own and operate the Stores contemplated by this Agreement, and by all other agreements between the Company and such assignee, and all agreements proposed to be assigned to such assignee;
- (ii)that the assignee expressly assumes in writing for the benefit of Company all rights and obligations of Area Developer under this Agreement and all franchise agreements executed pursuant hereto;
- (iii)that the assignee shall have completed the Company's training program to Company's satisfaction, exercised in good faith;
- (iv)that as of the date of any such assignment, the assignor shall have fully complied with all of its obligations to Company, whether under this Agreement or any other agreement, arrangement or understanding with Company;
- (v)that assignee, if then a Franchisee of Company, is not then in default of any of his obligations to Company;
- (vi)that Area Developer provides a general release to Company, its owners, officers, directors, and affiliates;
- (vii)that the assignee shall pay to Company a transfer fee equal to $5,000 which is reasonably required to cover Company's expenses relating to said assignment, and a training fee of $5,000; provided however that Company shall waive such training fee if the assignment is to an existing franchisee.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, the Area Developer's ability to assign the Area Development Agreement is restricted. Amorino has entered into the agreement based on the Area Developer's specific skills, qualifications, trust, and confidence. If the Area Developer is a corporation or partnership, Amorino considers the principal officers' or partners' active participation in the Franchised Business.
Therefore, the Area Developer cannot assign or transfer their interest in the agreement, whether voluntarily or involuntarily, without Amorino's prior written consent. Amorino can withhold this consent for any reason. Any attempt to assign or transfer the agreement without Amorino's consent is considered void.
Furthermore, certain events are automatically considered an assignment of the agreement. These include the death or legal incapacity of a shareholder owning 20% or more of the corporation, the withdrawal/death/incapacity of a general partner, transfer of interest by any general partner, issuance of securities resulting in existing shareholders owning less than 80% of the shares, transfer of 20% or more of the capital stock, and any merger or reorganization involving the Area Developer. The Area Developer also cannot pledge or encumber the agreement without Amorino's express written permission, which Amorino may withhold for any reason. Any assignment is subject to Amorino's right of first refusal.