If Bang Cookies transfers the Franchise Agreement, does the agreement remain in effect?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts
and other debts, of whatever nature or kind, in a timely manner;
- (3) Franchisee, each Owner, and each Spouse must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee and their respective spouses shall personally execute the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1. Each owner of the transferee shall also be required to execute such further agreements designated by Franchisor whereby the proposed transferee assumes each and every obligation and responsibility of Franchisee as set forth in this Agreement;
- (5) All obligations of Franchisee under this Agreement and the Ancillary Agreements shall be assumed by the transferee, each individual owner of transferee, and their respective spouses in a manner satisfactory to Franchisor;
- (6) Franchisee, each Owner, and each Spouse must execute the General Release attached to this Agreement as Exhibit 8 releasing Franchisor, Franchisor's affiliates and Franchisor's past and present officers, directors, shareholders, members, partners, agents, representatives, independent contractors, servants and employees, of any and all claims against Franchisor for matters arising on, or before, the effective date of the Transfer;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if the Franchise Agreement is transferred, the transferee is generally bound by the original terms and conditions. Specifically, the transferee must adhere to the existing agreement, and each owner of the transferee, along with their spouses, must execute the Franchise Owner and Spouse Agreement and Guaranty. This ensures that the obligations and responsibilities of the original franchisee are assumed by the new owner in a manner satisfactory to Bang Cookies.
However, Bang Cookies has the option to require the transferee to execute the then-current standard form Franchise Agreement offered to new franchisees, especially if the transfer involves the agreement itself, substantially all assets of the franchised business, or a controlling interest in the franchisee. This new agreement would be for a term ending on the original expiration date and would supersede the original agreement.
While the terms of the new agreement may differ, Bang Cookies states that the Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in the original agreement will remain the same. This provision aims to protect Bang Cookies's revenue streams while allowing for updated operational terms and conditions in the new franchise agreement. Therefore, the Franchise Agreement may remain in effect, or it may be superseded by a new agreement at Bang Cookies's discretion, depending on the nature of the transfer.