Does the Baya Bar Multi-Unit Development Agreement specify the method by which the Development Rights must be transferred?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| Section in Multi | |||
|---|---|---|---|
| Unit Development | |||
| Provision | Agreement | Summary | |
| k. | "Transfer" by franchisee defined | Section 6.3 | Any assignment, sale, transfer, gift, devise or encumbrance of any interest in the Multi-Unit Development Agreement or Development Rights. |
| l. | Franchisor approval of transfer by franchisee | Sections 6.2, 6.3 | No transfer is allowed without our consent, which we will not unreasonably withhold. |
| m. | Conditions for franchisor approval of a transfer | Section 6.3 and 6.4 | Conditions include: our decision not to exercise our right of first refusal; transferee meets our then-current standards for qualifying developers; you have paid us all amounts owed; transferee signs our then-current form of Multi-Unit Development Agreement, which may have materially different terms from your Multi Unit Development Agreement; you and the transferee sign a General Release in the form of Attachment 3 to the Franchise Agreement; you shall subordinate any claims you have against the transferee to us; our approval of the material terms and conditions of the transfer; payment of a transfer fee equal to 50% of the then current initial franchise fee or 25% of the then-current initial franchise fee for transfer to an existing developer or franchisee in good standing, or $2,000 for transfers among owners or $2,500 for a transfer to a spouse, parent or child upon |
| n. | Franchisor's right of first refusal to acquire franchisee's business | Section 6.5 | death or permanent disability. You must promptly notify us of any written offer to purchase your Development Rights. We have 30 days to exercise our first right to buy it on the same terms and conditions, provided that (a) we may substitute cash for any other consideration (b).we may pay the entire purchase price at closing, (c) our credit is deemed as good as the proposed purchaser, (d) we have at least 60 days to close and (e) you shall give us all customary seller's representations and warranties. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 43–52)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement outlines several conditions and procedures related to the transfer of development rights. Specifically, any assignment, sale, transfer, gift, devise, or encumbrance of any interest in the Multi-Unit Development Agreement or Development Rights is considered a "transfer."
The Baya Bar FDD states that a franchisee cannot transfer their Development Rights without the franchisor's consent, which Baya Bar will not unreasonably withhold. If a franchisee receives a written offer to purchase their Development Rights, they must promptly notify Baya Bar, which then has 30 days to exercise its right of first refusal to buy the rights on the same terms and conditions. Baya Bar can substitute cash for other forms of consideration, pay the entire purchase price at closing, and requires at least 60 days to close the deal. Additionally, the franchisee must provide all customary seller's representations and warranties.
Furthermore, Baya Bar's approval of a transfer is conditional upon several factors, including Baya Bar's decision not to exercise its right of first refusal, the transferee meeting Baya Bar's current standards for developers, the franchisee having paid all outstanding amounts owed to Baya Bar, and the transferee signing Baya Bar's current form of Multi-Unit Development Agreement, which may have materially different terms. Both the franchisee and the transferee must sign a General Release, and the franchisee must subordinate any claims against the transferee to Baya Bar. Approval also depends on Baya Bar's approval of the transfer's material terms and conditions and the payment of a transfer fee. The transfer fee is equal to 50% of the then-current initial franchise fee, 25% of the then-current initial franchise fee for a transfer to an existing developer or franchisee in good standing, $2,000 for transfers among owners, or $2,500 for a transfer to a spouse, parent, or child.