What obligations of the Bang Cookies franchisee must be assumed by the transferee, individual owners, and their spouses during a transfer?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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;
(7) If the proposed Transfer includes or entails the Transfer of this Agreement, substantially all of the assets of the Franchised Business, a controlling interest in Franchisee, or is one of a series of Transfers which in the aggregate Transfers substantially all of the assets of the Franchised Business or a controlling interest in Franchisee, then, at the election of Franchisor and upon notice from Franchisor to Franchisee, the transferee may be required to execute (and/or, upon Franchisee's request, shall cause all interested parties to execute) for a term ending on the expiration date of the original Term of this Agreement, the then current standard form Franchise Agreement offered to new franchisees of Bang Cookies Shops and any other agreements as Franchisor requires.
Such agreements shall supersede this Agreement and its associated agreement in all respects, and the terms of Franchisor's then current agreements may differ from the terms in this Agreement, provided that such agreements shall provide for the same Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, several obligations must be met during a franchise transfer. The transferee is bound by all the terms and conditions of the existing Franchise Agreement. Each owner of the transferee, along with their spouses, must personally execute the Franchise Owner and Spouse Agreement and Guaranty. Additionally, they may be required to execute further agreements to ensure they assume all responsibilities of the franchisee as outlined in the original agreement. All obligations of the franchisee under the Franchise Agreement and any Ancillary Agreements must be assumed by the transferee, each individual owner of the transferee, and their respective spouses in a manner satisfactory to Bang Cookies.
Furthermore, the franchisee, each owner, and each spouse must execute a General Release, releasing Bang Cookies and its affiliates from any claims arising on or before the transfer's effective date. If the transfer involves the Franchise Agreement, substantially all assets of the franchised business, or a controlling interest in the franchisee, Bang Cookies can require the transferee to execute the then-current standard form Franchise Agreement for new franchisees, which would supersede the original agreement. However, the new agreement must maintain the same Royalty Fee, Advertising Contributions, and other financial obligations as the original agreement.
These conditions ensure that the new ownership is fully committed to the Bang Cookies franchise system and that Bang Cookies is protected from potential liabilities during and after the transfer. A prospective franchisee should carefully consider these obligations and ensure that any potential transferee is aware of and willing to comply with these requirements. This protects the brand and ensures a smooth transition of ownership while maintaining the standards and financial commitments of the franchise.