Does the language regarding transfer of the Bang Cookies franchise agreement constitute consent to any transfer without the Franchisor's express written consent?
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 Franchisor, or otherwise in violation of this Agreement including, but not limited to this Article 14.B. shall constitute a breach of this Agreement and shall convey to the transferee no rights or interests in this Agreement; and
- (5) In the event of a Transfer of this Agreement that is approved by Franchisor, Franchisee shall not be relieved of Franchisee's obligations under this Agreement whether said obligations accrued and/or arose prior to and/or after the date of Transfer.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, franchisees are explicitly prohibited from transferring any ownership interest, rights, or obligations related to the franchise agreement without the prior written consent of Bang Cookies. This includes the franchise agreement itself, the lease or ownership of the shop location, the franchised business, and the assets associated with the franchised business. This restriction does not prevent a franchisee from obtaining financing for the initial development of the franchise prior to its opening.
The FDD specifies that any transfer without Bang Cookies's written consent constitutes a breach of the agreement and will not grant the transferee any rights or interests in the agreement. Even if a transfer is approved by Bang Cookies, the original franchisee remains responsible for all obligations under the agreement, regardless of whether these obligations arose before or after the transfer date.
This requirement for prior written consent is a standard practice in franchising, allowing Bang Cookies to maintain control over who operates its franchises and to ensure that transferees meet the company's standards. The definition of "transfer" is broad, including not only direct assignments and sales but also indirect transfers such as mergers, consolidations, and changes in ownership interests. This comprehensive definition aims to prevent franchisees from circumventing the transfer restrictions through indirect means.
For a prospective Bang Cookies franchisee, this means that selling the franchise or transferring ownership requires a formal approval process with Bang Cookies. It is important to understand the conditions for transfer, including providing advance notice, satisfying outstanding obligations, and ensuring the transferee meets Bang Cookies's criteria. Additionally, franchisees should be aware of the $15,000 transfer fee and the potential requirement for the transferee to upgrade the shop to current standards.