What is the timeframe allowed to transfer Baya Bar Development Rights to a replacement developer after death or permanent disability?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| Section in Multi | |||
|---|---|---|---|
| Unit Development | |||
| Provision | Agreement | Summary | |
| 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. |
| o. | Franchisor's option to purchase franchisee's business | Section 6.5.2 | Not Applicable |
| p. | Death or disability of franchisee | Section 6.6 | The Multi-Unit Development Agreement will terminate automatically upon your death or permanent disability, unless prohibited by law and the Development Rights are transferred within 6 months to a replacement developer that we approve. |
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, if a multi-unit developer dies or becomes permanently disabled, their Development Rights can be transferred to a replacement developer. This transfer must occur within 6 months of the death or disability.
However, this transfer is not automatic. Baya Bar must approve the replacement developer. This implies that the proposed replacement developer will need to meet Baya Bar's then-current standards for developers.
If the Development Rights are not transferred within the 6-month timeframe and Baya Bar does not approve a replacement developer, the Multi-Unit Development Agreement will terminate automatically, unless prohibited by law.