Does the Bang Cookies Franchisee need Franchisor approval to transfer ownership interest?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees, and Franchisee represents and warrants that Franchisee's Owners understand and agree, that the rights and duties set forth in this Agreement are personal to Franchisee and each Owner. Therefore, Franchisee agrees that:
- (1) No ownership interest of any Owner in Franchisee may be Transferred without the prior written consent of Franchisor;
- (2) No obligations, rights or interest of Franchisee in (a) this Agreement, (b) the lease or ownership interests in Franchisee's Shop Location and Franchisee's Shop Facility, (c) the Franchised Business, or (d) all or substantially all of the assets of the Franchised Business may be Transferred without the prior written consent of Franchisor. This restriction shall not prohibit Franchisee from granting a mortgage, charge, lien, or security interest in the assets of the Franchised Business or this Agreement for the exclusive purpose of securing financing for the initial development (occurring prior to the Actual Business Commencement Date) of the Franchised Business;
- (3) Without limitation to the foregoing, any Transfer by Franchisee respecting and/or relating to this Agreement and/or the Franchised Business and/or assets associated with the Franchised Business will require the prior written consent of Franchisor where such Transfer occurs by virtue of: (a) divorce or legal dissolution of marriage; (b) insolvency; (c) dissolution of a Corporate Entity;
- (d) last will and testament; (e) intestate succession; or (f) declaration of, or transfer in trust;
- (4) Any purported Transfer without the written consent of
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, franchisees must obtain prior written consent from Bang Cookies to transfer any ownership interest. This requirement extends to any transfer of the franchisee's obligations, rights, or interests in the Franchise Agreement, the lease or ownership interests in the shop location, the franchised business, or substantially all of the assets of the franchised business. However, franchisees do not need written consent from Bang Cookies to obtain a mortgage, charge, lien, or security interest in the assets of the franchised business or the Franchise Agreement for the exclusive purpose of securing financing for the initial development of the franchised business before the business commencement date.
The FDD specifies that any transfer without written consent from Bang Cookies is prohibited. This includes transfers occurring due to divorce or legal dissolution of marriage, insolvency, dissolution of a corporate entity, last will and testament, intestate succession, or declaration of, or transfer in trust.
This provision ensures that Bang Cookies retains control over who becomes a franchisee and maintains standards within its franchise system. It allows Bang Cookies to evaluate potential transferees to ensure they meet the brand's criteria for franchisees. Prospective franchisees should be aware of these restrictions and the need to obtain franchisor approval before making any ownership transfers.