What liability remains with the Bang Cookies franchisee, owner, and spouse after a transfer?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
(9) Franchisee, each Owner, and each Spouse shall remain liable for all obligations to Franchisor set forth in this Agreement;
(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;
(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;
(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.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, even after a franchise is transferred, the franchisee, each owner, and their spouses remain liable for all obligations to Bang Cookies as outlined in the Franchise Agreement. To be released from these obligations, the franchisee, owners, and spouses must execute a General Release, which releases Bang Cookies and its affiliates from any claims arising on or before the transfer date. This ensures that Bang Cookies is protected from potential liabilities related to the period before the transfer.
Specifically, all obligations of the franchisee under the Franchise Agreement and any related agreements must be assumed by the transferee, each individual owner of the transferee, and their respective spouses in a manner satisfactory to Bang Cookies. This means the new owners are stepping into the shoes of the previous ones, taking on all responsibilities and liabilities. The transferee must also adhere to all terms and conditions of the existing Franchise Agreement, and each owner of the transferee, along with their spouses, must personally execute the Franchise Owner and Spouse Agreement and Guaranty.
This requirement ensures that Bang Cookies maintains consistent standards and obligations across all its franchisees, even when ownership changes. The new owners are legally bound to uphold the original agreement, and the previous owners are released from future liabilities only after fulfilling specific conditions, including the execution of a general release. This process protects Bang Cookies from potential disputes or claims related to the franchise's operation before the transfer, while also ensuring a smooth transition of responsibilities to the new franchisee.