If a B Bops developer is an individual and desires to transfer the development rights to a partnership, corporation or limited liability company, must the developer be the principal executive of such entity?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, if a developer is an individual and wants to transfer development rights to a partnership, corporation, or LLC, B Bops will not unreasonably withhold consent if certain conditions are met. One of these conditions is that the developer must be the principal executive of the entity.
In addition to the developer being the principal executive, the entity must also meet the requirements outlined in Section 14 regarding entity ownership of development rights. The developer must own a majority of the equity and voting securities or interests issued by the entity. All accrued monetary obligations of the developer to B Bops must be satisfied before the transfer, and the developer must be in full compliance with the terms of the Development Agreement and all Unit Franchise Agreements. The entity must also agree in writing to assume all of the developer's obligations.
Even with the assignment to an entity, the developer remains jointly and severally liable for all obligations under the Development Agreement. This means that even after the transfer, B Bops can still hold the original developer responsible for the entity's performance and financial obligations. This requirement protects B Bops and ensures the original developer remains invested in the success of the development, even after transferring the rights to a separate business entity.