What is the purpose of the restrictions on transfer in the Bb.Q Chicken Multi-Unit Operator Agreement?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
SECTION 11 TRANSFER OF INTEREST
- 11.1 This Agreement is personal to you and you shall neither sell, assign, transfer nor encumber this Agreement, the Development Rights, or any other interest hereunder, nor suffer or permit any such assignment, transfer or encumbrance to occur directly, indirectly or contingently by agreement or by operation of law without our prior written consent.
You understand that this Agreement may not be pledged, mortgaged, hypothecated, given as security for an obligation or in any manner encumbered.
The assignment or transfer of any interest, except in accordance with this Section shall constitute a material breach of this Agreement.
- 11.6 Except as provided in this Section 11, we agree not to unreasonably withhold our consent to a sale, assignment or transfer by you hereunder.
Consent to such transfer otherwise permitted or permissible as reasonable may be refused unless:
11.6.1 All of your obligations created by this Agreement, all other franchise documents, including all Franchise Agreements, and the relationship created hereunder are assumed by the transferee.
11.6.2 All ascertained or liquidated debts of you to us or our affiliated or subsidiary corporations are paid.
11.6.3 You are not in default hereunder.
11.6.4 We are reasonably satisfied that the transferee meets all of our requirements for new multi-unit operators, including but not limited to, good reputation and character, business acumen, operational ability, management skills, financial strength and other business considerations.
11.6.5 Transferee executes or, in appropriate circumstances, causes all necessary parties to execute, our standard form of Multi-Unit Operator Agreement, Franchise Agreements for all Franchised Businesses open or under construction hereunder, and such other then-current ancillary agreements being required by us of new multi-unit operators on the date of transfer.
11.6.6 You execute a general release, in a form satisfactory to us, of any and all claims against us, our officers, directors, employees and principal stockholders of any and all claims and causes of action that you may have against us or any subsidiary or affiliated corporations in any way relating to this Agreement or the performance or non-performance thereof by us.
You also agree to subordinate any claims you may have against the transferee to us and indemnify us against any claims by the transferee relating to misrepresentations in the transfer process, specifically excluding those representations made by us in the Franchise Disclosure Document given to the transferee.
- 11.6.7 You or transferee pay to us a transfer fee in the amount of fifty percent 50% of the then current initial franchise fee to transferees outside of the System, or twenty percent (20%) of the then current initial franchise fee to existing franchisees.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to the 2025 Bb.Q Chicken Franchise Disclosure Document, Section 11 outlines the stipulations regarding the transfer of interest in the Multi-Unit Operator Agreement. Bb.Q Chicken emphasizes that the agreement is personal to the operator, preventing them from selling, assigning, transferring, or encumbering the agreement, development rights, or any related interest without prior written consent from Bb.Q Chicken. This restriction ensures that Bb.Q Chicken maintains control over who operates and develops their franchises. Any transfer not adhering to these conditions constitutes a material breach of the agreement.
The restrictions serve multiple purposes, including ensuring the transferee assumes all obligations of the agreement, settles any outstanding debts to Bb.Q Chicken or its affiliates, and is not in default of the agreement. Bb.Q Chicken also needs to be satisfied that the transferee meets the requirements for new multi-unit operators, assessing their reputation, business acumen, operational ability, management skills, and financial strength. The transferee must also execute Bb.Q Chicken's standard Multi-Unit Operator Agreement and Franchise Agreements, along with any other required ancillary agreements.
Furthermore, the transfer process requires the original operator to execute a general release of claims against Bb.Q Chicken and to subordinate any claims against the transferee. A transfer fee is also mandated, set at fifty percent of the current initial franchise fee for transferees outside the Bb.Q Chicken system, or twenty percent for existing franchisees. These measures collectively protect Bb.Q Chicken's interests, maintain brand standards, and ensure financial stability and operational competence within its franchise network.