Does the Bang Cookies franchise agreement require notification in writing for proposed transfers of equity or the Franchise Agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) if you are an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of your equity and/or ownership interests in Franchisee and/or should Franchisee, fail to obtain our consent to the proposed Transfer of your equity and/or ownership interests in Franchisee (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms and conditions of the Franchise Agreement;
- (b) if you are a Spouse, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of your Spouse's equity and/or ownership interests in Franchisee and/or should Franchisee, fail to obtain our consent to the proposed Transfer of your Spouse's equity and/or ownership interests in Franchisee (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the noncompetition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms of the Franchise Agreement;
- (c) if you are an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of the Franchise Agreement to a third party and/or should Franchisee, fail to obtain our consent to the proposed Transfer of the Franchise Agreement to a third party (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms
and conditions of the Franchise Agreement; and
14.C. CONDITIONS FOR APPROVAL OF TRANSFER
Provided Franchisee and each Owner and Spouse, respectively, are in substantial compliance with this Agreement and the Ancillary Agreements, and Franchisor does not elect to exercise Franchisor's right of first refusal as set forth in Article 14.F. below, Franchisor shall not unreasonably withhold its approval of a Transfer by Franchisee or an Owner. The proposed transferee (including such assignee's owner(s) and spouse(s) if the proposed transferee is a Corporate Entity) must be of good moral character, have sufficient business experience, aptitude and financial resources to own and operate a Bang Cookies Shop, and otherwise meet Franchisor's then applicable standards for franchisees as determined by Franchisor in its sole, but reasonable discretion. Furthermore, the proposed transferee and the proposed transferee's owners and spouses may not own or operate, or intend to own or operate, a Competitive Business. Franchisee agrees that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:
- (1) Franchisee must provide written notice to Franchisor of the proposed Transfer of this Agreement at least 30 days prior to the Transfer, and Franchisee must have also satisfied the obligations set forth in Article 14.F. below;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the franchise agreement requires written notification to the company for proposed transfers of equity or the Franchise Agreement. Specifically, if an owner or spouse of an owner plans to transfer their equity or ownership interests in the Bang Cookies franchise, the franchisee must provide proper and timely written notice to Bang Cookies. Additionally, the franchisee must obtain Bang Cookies's consent for the proposed transfer, which Bang Cookies may either approve or reject based on the terms and conditions of the Franchise Agreement.
Failure to provide timely written notice and obtain consent for the transfer can have significant consequences for the owner or spouse. They will remain subject to the non-competition covenants outlined in Article 4 of the Franchise Agreement, regardless of any attempted or actual transfer that violates the agreement's terms. This means that even if the owner or spouse transfers their equity without proper notification and consent, they will still be bound by the non-compete restrictions, which could limit their future business activities.
Furthermore, the Franchise Agreement stipulates that a franchisee must provide written notice to Bang Cookies at least 30 days before any proposed transfer of the agreement. This advance notice allows Bang Cookies to assess the proposed transferee's qualifications and ensure they meet the company's standards for franchisees. These standards include good moral character, sufficient business experience, aptitude, and financial resources to operate a Bang Cookies shop. The proposed transferee also cannot own or operate a competitive business.
In summary, the requirement for written notification and consent for equity or Franchise Agreement transfers is a critical aspect of the Bang Cookies franchise system. It allows Bang Cookies to maintain control over who becomes a franchisee and ensures that all franchisees meet the company's standards. Franchisees must adhere to these requirements to avoid potential penalties, such as remaining subject to non-competition covenants, and to ensure a smooth and approved transfer process.