Are the rights granted to a Bang Cookies franchisee transferable, and to what do they relate?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Shop designs, images, marketing materials, packaging, branding and/or branding images which Franchisor authorizes and requires Franchisee to use in connection with the operation of the Franchised Business and as may be revised and further developed by Franchisor from time to time.
"Training Program" shall have the meaning defined and set forth in Article 4.A. of this Agreement.
"Transfer" refers to and means and shall include, without limitation, the following, whether voluntary or involuntary, conditional or unconditional, and/or direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee; and/or (e) the legal and/or equitable transfer and/or sale of an Owners interests and/or voting rights in Franchisee.
"Transfer Fee" shall have the meaning defined in Article 14.C.(11) of this Agreement. The Transfer Fee is a fixed sum of $15,000.
ARTICLE 2 GRANT OF FRANCHISE
2.A. GRANT OF FRANCHISE
Franchisee has requested that Franchisor grant to Franchisee the non-exclusive license and right to develop, own and operate a Bang Cookies Shop from a fixed Shop Location located within a specified territory. Relying on the representations made by Franchisee and/or Franchisee's Owners in any submitted application and during the application process and subject to the terms and conditions of this Agreement, Franchisee's request has been approved by Franchisor, subject to the following terms and conditions:
- (1) During the Term of this Agreement and subject to the rights of Franchisor including, but not limited to, the Reserved Rights, Franchisor grants to Franchisee and Franchisee accepts, the nonexclusive license, right and obligation to develop and operate, one Bang Cookies Shop in conformity with the System and this Agreement from a single fixed shop location, selected by Franchisee but requiring the approval of Franchisor ("Franchisee's Shop Location") and, as designated by Franchisor in Franchisor's discretion and Reasonable Business Judgment, within a Designated Territory;
- (2) Unless otherwise expressly authorized in Schedule 1 to this Agreement, Franchisee's Shop must be established as a Bakery Location;
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the rights granted to a franchisee are transferable under specific conditions. The term "Transfer" is broadly defined to include assignments, sales, gifts, transfers, pledges, or sub-franchises, whether voluntary or involuntary, conditional or unconditional, and/or direct or indirect. It also encompasses the grant of a mortgage, charge, lien, or security interest, mergers, consolidations, exchanges of shares or other ownership interests, issuance of additional ownership interests or securities, redemption of ownership interests, a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee, and/or the legal and/or equitable transfer and/or sale of an Owners interests and/or voting rights in Franchisee.
This means a Bang Cookies franchisee can sell their franchise, but the transfer is subject to approval by Bang Cookies. Bang Cookies's approval indicates only that the transferee meets the criteria established by Bang Cookies for franchisees as of the time of such transfer, and Franchisor's approval thereof does not constitute a warranty or guaranty by Franchisor, express or implied, of the suitability of the terms of sale, successful operation, or profitability of the Franchised Business. The franchisor's approval of a transfer does not mean that future transfers are also approved, and each transfer requires separate approval.
The transfer must comply with all applicable laws. The transfer of the Franchised Business, the lease for Franchisee's Bang Cookies Shop Facility, Shop Location and the assets of the Franchised Business shall be made only in conjunction with a Transfer of this Agreement, approved by Franchisor. Consent to a transfer does not waive any claims Bang Cookies may have against the franchisee or waive Bang Cookies's right to demand strict compliance with the agreement by the transferee. A transfer fee of $15,000 is required.
For a prospective Bang Cookies franchisee, this means that while you have the option to sell your franchise, the process is not automatic and involves Bang Cookies's review and approval. You will need to find a buyer who meets Bang Cookies's then-current criteria for franchisees. Also, the $15,000 transfer fee should be factored into any sale negotiations. It is important to understand that Bang Cookies's approval of a transfer does not guarantee the future success or profitability of the franchise under new ownership.