What happens if a Baya Bar Developer attempts an unauthorized transfer of rights?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
7.2.5 attempts a Transfer in violation of the provisions of Article 6 of this Agreement;
7.3 Curable Defaults.
Developer shall be deemed to be in material default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, if Developer fails to cure the default within the time period set forth in this Section 7.3, effective immediately upon notice to Developer, if Developer:
- 6.2 Restrictions on Transfers by Developer.
Developer's rights and duties under this Agreement are personal to Developer, and Franchisor has made this Agreement with Developer in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Developer.
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval.
Franchisor may void any transfer made without such approval.
- 6.3 Transfers by Developer.
Developer shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right granted or interest herein or hereunder (a "Transfer") or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless Developer first obtains the written consent of Franchisor, which Franchisor may or may not grant in Franchisor's sole discretion, and subject to the following:
6.3.1 The proposed transferee must be an individual of good moral character and otherwise meet Franchisor's then-applicable standards for multi-unit franchisees.
6.3.2 The transferee must have sufficient business experience, aptitude and financial resources to operate multiple Baya Bar outlets and to comply with this Agreement;
6.3.3 The transferee has agreed to complete Franchisor's Initial Management Training Program to Franchisor's satisfaction;
6.3.4 Developer has paid all amounts owed to (i) Franchisor pursuant to this Agreement and all Franchise Agreements and other agreements between Franchisor and/or Franchisor's affiliates and Developer and (ii) third-party creditors;
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to the 2024 Baya Bar Franchise Disclosure Document, if a developer attempts a transfer of rights in violation of Article 6 of the agreement, it constitutes a material default. This gives Baya Bar the option to terminate the agreement and all rights granted to the developer.
Baya Bar requires prior written approval for any transfer of rights, as they rely on the character, skills, and financial capacity of the developer. If a transfer occurs without this approval, Baya Bar has the right to void the transfer.
Article 6 outlines specific conditions for transfers, including that the proposed transferee must meet Baya Bar's standards for multi-unit franchisees, possess sufficient business experience and financial resources, and agree to complete the initial management training program. Additionally, the developer must have paid all outstanding amounts owed to Baya Bar and third-party creditors. These stipulations ensure that any new developer is well-qualified and financially stable, protecting the Baya Bar brand and system.