Can a B Bops developer transfer a controlling ownership interest in the developer entity without the company's consent?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
ENT BY DEVELOPER. Developer acknowledges that the rights and duties created pursuant to this Agreement are personal to Developer and its owners and that Company has granted the development rights in reliance upon the character, skill, business ability, financial capacity and attitude of Developer and its owners. Therefore, without the prior written approval of Company, neither this Agreement nor the development rights (or any interest therein), nor any controlling ownership interest in Developer may be directly or indirectly, voluntarily or by operation of law, sold, assigned, conveyed, sublet, subfranchised or otherwise transferred (hereinafter collectively referred to as a "transfer") to any person or entity. Under no circumstances will Developer be permitted to make any partial transfer of the development rights granted hereunder; any sale, assignment or transfer of this Agreement or the development rights shall require Developer to transfer all of Developer's right, title and interest in and to this Agreement and the development rights. Company shall not unreasonably withhold its consent to any transfer when requested, provided that such transfer complies with the following requirements that may be applicable to the particular type of transfer:
- A. Transfer to Successor Entity. If Developer is an individual and desires to transfer the development rights to a partnership, corporation or limited liability company, Company will not unreasonably withhold its consent to such transfer upon satisfaction of the following conditions: (i) such entity shall comply with each of the requirements specified in Section 14 hereof pertaining to ownership of the development rights by an entity; (ii) Developer shall be the owner of a majority of the equity and voting securities or interests issued by such entity; (iii) Developer shall be the principal executive of such entity; (iv) all accrued money obligations of Developer to Company shall be satisfied prior to the transfer and Developer shall otherwise be in full compliance with the terms of this Agreement and all Unit Franchise Agreements between the parties; and (v) the entity agrees, in writing satisfactory to Company, to assume all Developer's obligations hereunder. Any assignment to an entity as provided herein shall not release Developer from any obligations imposed by this Agreement and Developer shall remain jointly and severally liable for all such obligations.
- B. Death or Disability of Developer. In the event of death or permanent mental or physical disability of Developer, or any partner, shareholder or member owning a controlling interest in Developer, the legal representative of Developer, or such partner, shareholder or member thereof, together with all surviving partners, shareholders or members, if any, jointly, shall, within six (6) months of such event apply in writing for the right to transfer the development rights, or the controlling ownership interest of the deceased or disabled partner, shareholder or member in Developer, to such person or persons as the legal representative may specify.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a developer cannot transfer a controlling ownership interest in the developer entity without prior written approval from B Bops. B Bops acknowledges that the rights and duties are personal to the developer and its owners, and the company has granted development rights based on the character, skill, business ability, financial capacity, and attitude of the developer and its owners.
For any transfer of a controlling ownership interest in the developer entity, B Bops's prior written approval is required. This includes any direct or indirect transfer, whether voluntary or by operation of law. The term "transfer" encompasses selling, assigning, conveying, subletting, subfranchising, or otherwise transferring the agreement, development rights, or any controlling ownership interest in the developer.
B Bops also has a right of first refusal if a developer or any owner of the developer wishes to transfer their ownership interest. The developer must obtain a bona fide offer from a proposed purchaser and submit it to B Bops, giving B Bops the option to purchase the interest on the same terms. If B Bops declines, the developer can proceed with the transfer to the proposed purchaser, subject to obtaining B Bops's written consent.
Furthermore, any change in ownership that results in a cumulative change of 50% or more of the ownership interests in the developer is considered a transfer and is subject to these provisions. Developers must also notify B Bops of any change in ownership interests that constitutes 10% or more of the ownership interests in the developer.