What are the Baya Bar franchisee's obligations, or their legal representative's obligations, regarding the transfer of interests in the Franchise Agreement upon the death or permanent disability of the franchisee or any Principal?
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, in the event of the death or permanent disability of a franchisee or one of their principals, their legal representative is required to transfer the interest in the Franchise Agreement within six months from the date of death or permanent disability. This transfer must be to a third party that Baya Bar approves. Failure to complete this transfer within the specified timeframe constitutes a material default, leading to the termination of the franchise.
During the period following the death or permanent disability, or while the franchise is managed by an executor, administrator, guardian, personal representative, or trustee, the Baya Bar franchise must be supervised by an interim successor manager that Baya Bar finds satisfactory. Alternatively, Baya Bar may, at its discretion, provide interim management support, for which the franchisee would be responsible to pay Baya Bar's then-current interim management support fee. This interim management is in place until the franchise is successfully transferred to the deceased or disabled individual's legal heirs or successors.
The FDD defines 'permanent disability' as a mental or physical condition that is reasonably expected to prevent, or actually prevents, the person from providing continuous and material supervision of the Baya Bar franchise operations for at least six months from the onset of the condition. Any transfer of the franchise under these circumstances, including transfers by devise or inheritance, remains subject to the general transfer conditions outlined in the Franchise Agreement. If the transfer occurs through means other than a gift, devise, or inheritance, it is also subject to the terms regarding right of first refusal.