Does Bang Cookies have the right to reject or approve a proposed transfer of equity or ownership interests?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
- (a) if you are an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of your equity and/or ownership interests in Franchisee and/or should Franchisee, fail to obtain our consent to the proposed Transfer of your equity and/or ownership interests in Franchisee (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms and conditions of the Franchise Agreement;
- (b) if you are a Spouse, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of your Spouse's equity and/or ownership interests in Franchisee and/or should Franchisee, fail to obtain our consent to the proposed Transfer of your Spouse's equity and/or ownership interests in Franchisee (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the noncompetition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms and conditions of the Franchise Agreement;
- (c) if you are an Owner, should Franchisee fail to properly and timely notify us in writing of the proposed Transfer of the Franchise Agreement to a third party and/or should Franchisee, fail to obtain our consent to the proposed Transfer of the Franchise Agreement to a third party (which we may either reject or approve, in accordance with the terms and conditions of the Franchise Agreement), you shall remain subject to the non-competition covenants contained in Article 4 of this Agreement and irrespective of any purported and/or actual Transfer in violation of the terms
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, Bang Cookies retains the right to either reject or approve a proposed transfer of equity and/or ownership interests in the franchisee. However, this right is subject to certain conditions outlined in the Franchise Agreement. Specifically, the franchisee must properly and promptly notify Bang Cookies in writing about the proposed transfer.
If the franchisee fails to provide timely written notice or obtain Bang Cookies's consent, the owners and spouses involved in the transfer remain subject to the non-competition covenants detailed in Article 4 of the Franchise Agreement. This holds true regardless of any attempted or actual transfer that violates the agreement's terms. This provision ensures that individuals cannot circumvent their non-compete obligations by improperly transferring ownership.
This condition underscores the importance of adhering to the transfer protocols outlined in the Franchise Agreement. A prospective Bang Cookies franchisee must understand that any transfer of equity or ownership interests is subject to Bang Cookies's approval, and failure to comply with the notification and consent requirements can have significant consequences, particularly concerning non-competition obligations. This is a fairly standard practice in franchising, as franchisors typically want to ensure that new owners meet their standards and will not harm the brand.