What conditions must a transferee meet to acquire an Auntie Annes franchise through a related party transfer?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| o. You must comply with our right of first refusal. p. If you operate a Co-Branded Shop, the Co-Branded Agreement or Co- Branded Franchise are transferred at the same time. | ||
| FA: 16.4 (non-control transfers) | a. You give us prior written notice of the transfer. b. You pay all sums owed. c. You are not in default d. Transferee meets qualifications e. Transferee signs assignment and guaranty f. You and your guarantors and owners sign a general release. g. You remain liable for pre-Transfer obligations. h. You pay us a Transfer Fee. | |
| FA: 16.5 (related party transfers) | a. You give us prior written notice of the transfer. b. You are not in default c. Transferee meets qualifications d. Transferee assumes in writing the Franchise Agreement and the guaranty. e. You may not be in default under the Franchise Agreement. f. You pay us a Transfer Fee. g. You and your guarantors and owners must sign a general release and remain liable for pre-Transfer obligations |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 86–91)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, a related party transfer involves transferring the franchise to someone with a pre-existing relationship with the franchisee. To complete a related party transfer, the transferee must meet certain qualifications. The franchisee must provide prior written notice to Auntie Annes regarding the transfer.
The franchisee must not be in default under the Franchise Agreement. The transferee is required to meet Auntie Annes's qualifications for franchisees. The transferee must also assume the Franchise Agreement and the guaranty in writing. Additionally, the franchisee must pay Auntie Annes a Transfer Fee to finalize the transfer.
Furthermore, both the franchisee and their guarantors and owners are required to sign a general release and will remain liable for pre-transfer obligations. These conditions ensure that the new franchisee is qualified and committed to upholding the Auntie Annes brand standards, while also protecting Auntie Annes's interests and ensuring a smooth transition.