What payments must a Baya Bar Developer make before transferring rights?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
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;
6.4 Transfer Fee. As a condition to any Transfer, Developer shall pay Franchisor a transfer fee equal to fifty percent (50%) of the then-current initial franchise fee charged by Franchisor to a new franchisee of the Baya Bar System; provided however, (i) for transfers to an existing Baya Bar area developer or franchisee, who is in good standing with Franchisor, the transfer fee is twenty-five percent (25%) of the then-current initial franchise fee charged, (ii) for transfers among the individuals named as Developer in the introductory paragraph of this Agreement, the transfer fee is Two Thousand Dollars ($2,000.00), and (iii) for a transfer to a spouse, parent or child upon death or permanent disability of Developer, the transfer fee is Two Thousand Five Hundred Dollars ($2,500.00).
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a Developer must meet specific financial obligations before transferring their rights. Prior to any transfer, the Developer must ensure that all outstanding amounts owed to Baya Bar, its affiliates, and third-party creditors are fully paid. This requirement covers any debts accrued under the Development Agreement, Franchise Agreements, or any other agreements with Baya Bar or its affiliates.
In addition to settling outstanding debts, the Developer is also required to pay a transfer fee to Baya Bar. The standard transfer fee is equal to 50% of the then-current initial franchise fee charged to new franchisees. However, there are exceptions to this rule. If the transfer is to an existing Baya Bar area developer or franchisee in good standing, the transfer fee is reduced to 25% of the current initial franchise fee. For transfers among the individuals originally named as the Developer in the agreement, the transfer fee is $2,000. Furthermore, a transfer to a spouse, parent, or child due to the Developer's death or permanent disability incurs a transfer fee of $2,500.
These transfer conditions ensure that Baya Bar maintains financial integrity and control over who enters into agreements with their brand. By requiring the payment of outstanding debts and a transfer fee, Baya Bar aims to protect its revenue streams and ensure that new Developers or Franchisees are financially stable and committed to the brand. The varying transfer fees based on the transferee's status (existing franchisee, family member, etc.) provide some flexibility while still safeguarding Baya Bar's interests.