Under what conditions will B Bops not unreasonably withhold consent to a transfer of development rights to a successor 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, B Bops will not unreasonably withhold consent to a transfer of development rights to a successor entity if specific conditions are met. If the developer is an individual and wants to transfer rights to a partnership, corporation, or LLC, B Bops will not unreasonably withhold consent if the entity meets certain requirements.
First, the entity must comply with the requirements in Section 14 regarding entity ownership of development rights. Second, the developer must own a majority of the equity and voting securities or interests in the entity. Third, the developer must be the principal executive of the entity. Fourth, all accrued financial obligations of the developer to B Bops must be satisfied, and the developer must be in full compliance with the development agreement and all unit franchise agreements. Finally, the entity must agree in writing, in a form satisfactory to B Bops, to assume all of the developer's obligations under the development agreement.
It is important to note that even if the transfer is approved, the original developer remains jointly and severally liable for all obligations under the agreement. This means that the developer is still responsible for ensuring all obligations are met, even after the transfer. This provision protects B Bops and ensures the continued performance of the development agreement.