What constitutes a material default if the Baya Bar franchisee's interest is not transferred within the specified timeframe after death or disability?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
ys after the offer is given to Franchisor or (ii) there is any material change in the terms of the offer, the offer will again be subject to Franchisor's right of first refusal.
- 16.7 Death or Permanent Disability. The grant of rights under this Agreement is personal to Franchisee, and on the death or permanent disability of Franchisee or any of Franchisee's Principals, the executor, administrator, conservator or other personal representative of Franchisee or Principal, as the case may be, shall be required to transfer Franchisee's or Principal's interest in this Agreement within six (6) months from the date of death or permanent disability to a third party approved by Franchisor. Failure to transfer in accordance with the forgoing will constitute a material default and the Franchise granted by this Agreement will terminate. A transfer under this Section 16.7, including without limitation, transfer by devise or inheritance, is subject to the conditions for Transfers in this Article 16 and unless transferred by gift, devise or inheritance, subject to the terms of Section 16.6 above. For purposes of this Agreement, the term "permanent disability" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent such person from providing continuous and material supervision of the operation of Franchisee's Franchised Business during the six (6)-month period from its onset.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if the franchisee or one of their principals dies or becomes permanently disabled, their interest in the Franchise Agreement must be transferred within six months. This transfer must be to a third party approved by Baya Bar. Failure to complete this transfer within the specified six-month timeframe constitutes a material default under the Franchise Agreement.
This provision ensures that the Baya Bar franchise continues to be operated by a competent and approved individual even in unforeseen circumstances. The requirement for Baya Bar's approval of the transferee allows them to maintain brand standards and operational consistency across all franchise locations. The term 'permanent disability' is defined as a mental or physical condition that prevents the person from providing continuous and material supervision of the Baya Bar business for at least six months.
In the event of death or permanent disability, an interim successor manager, satisfactory to Baya Bar, must supervise the Franchised Business until the transfer is completed. Alternatively, Baya Bar may provide interim management themselves, charging their then-current interim management support fee. This ensures the continued operation of the Baya Bar location during the transition period. The transfer itself is subject to the standard transfer conditions outlined in the Franchise Agreement.