What restrictions must be stated in the By-Laws or Operating Agreement of a Baya Bar franchisee entity regarding the issuance and assignment of interests?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2 Restrictions on Transfers by Franchisee. Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval. Franchisor may void any transfer made without such approval.
- 16.3 Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, a franchisee's rights and duties under the Franchise Agreement are personal to the franchisee as it is organized and with the Principals of the business as they exist on the date of execution of the Agreement. Baya Bar has made the Agreement with the franchisee in reliance on their perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of the franchisee.
Therefore, the franchisee cannot directly or indirectly sell, assign, transfer, give, devise, convey, or encumber the Agreement or any right or interest herein, the Franchise, the Franchised Business, or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Baya Bar. Baya Bar may void any transfer made without such approval.
This means that as a prospective Baya Bar franchisee, you will need to get approval from Baya Bar before you can transfer any part of your franchise to someone else. This is a fairly standard practice in franchising, as franchisors want to make sure that any new owners meet their standards and are a good fit for the brand.