Can a B Bops developer transfer the development rights to another individual?
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. Consent to such transfer (including transfers by devise or inheritance) will not unreasonably be withheld by Company, provided that Company may in its discretion require that such transfer comply with one
or more of the conditions set forth in Section 13(C) hereof, except that: (i) payment of the transfer fee shall not be required; and (ii) the legal representative need not comply with Company's right of first refusal if the transfer is to be a member of the immediate family of Developer or to a member of the immediate family of the deceased or disabled partner, shareholder or member. If the legal representative and any surviving partners, shareholders or members fail to comply with the provisions of this Section 13(B), or do not propose a transferee acceptable to Company, this Agreement and the development rights granted hereunder may be terminated in accordance with the provisions of Section 11 hereof. Any transfer of a noncontrolling ownership interest in Developer upon the death or disability of a partner, shareholder or member shall be deemed approved by Company upon receipt by Company of written notice of such transfer.
- C. Other Transfers. Company will not unreasonably withhold its consent to any transfer not falling within the scope of Sections 13(A) or 13(B) above, provided that Company may in its discretion require that one or more of the following conditions be satisfied prior to, or concurrently with, the effective date of such transfer:
- (1) The transferee shall be of good moral character and reputation, have the financial capacity to develop the Units in accordance with the Development Schedule, have business qualifications reasonably acceptance to Company and otherwise meet Company's then current standards for developers.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a developer's rights and duties under the Development Agreement are personal, and B Bops has granted these rights based on the developer's character, skills, business ability, financial capacity, and attitude. Therefore, the developer cannot transfer the Development Agreement or development rights to another individual or entity without B Bops's prior written approval.
B Bops will not unreasonably withhold consent for transfers that do not fall under specific categories like transfers to a successor entity or due to death/disability, provided certain conditions are met. These conditions include the transferee demonstrating good moral character, having the financial capacity to meet the development schedule, possessing acceptable business qualifications, and meeting B Bops's current standards for developers. The transferee must also enter into a written agreement assuming all of the developer's obligations, and the developer may be required to execute a general release of claims and a non-disclosure and non-competition agreement. Additionally, all outstanding obligations to B Bops must be satisfied, and a transfer fee of $3,000 must be paid to cover B Bops's expenses related to the transfer.
Furthermore, if the developer intends to transfer the agreement, development rights, or ownership interest, they must first obtain a written offer from the proposed purchaser and submit it to B Bops. B Bops then has the option to purchase the rights or ownership interest at the same price and terms as the offer. If B Bops declines, the developer can proceed with the transfer to the proposed purchaser, provided they comply with the conditions mentioned earlier, including obtaining B Bops's written consent. Any material changes to the offer require notifying B Bops, giving them another opportunity to exercise their right of first refusal.
These stipulations are typical in franchising, as franchisors want to ensure that any new developer or owner meets their standards and is capable of upholding the brand's reputation and operational requirements. The $3,000 transfer fee is also a common practice to cover the franchisor's administrative costs associated with evaluating and approving the transfer. The right of first refusal allows B Bops to maintain control over who becomes a developer within their system.