Must the transferee assume all obligations of the franchise agreement with Bb.Q Chicken?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
chisee's application for a franchise, including, but not limited to, our educational, managerial and business standards; transferee's good moral character, business reputation and credit rating; transferee's aptitude and ability to conduct the business franchised herein (as may be evidenced by prior related business experience or otherwise); transferee's financial resources and capital for operation of the business; and the geographic proximity and number of other Franchised Businesses owned or operated by transferee;
- (e) The transferee shall enter into a written agreement, in a form reasonably satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants and agreements contained in this Agreement; and, if transferee is a corporation or a partnership, transferee's shareholders, partners or other investors, as applicable, shall execute such agreement as transferee's principal(s) and guarantee the performance of all such obligations, covenants and agreements;
- (f) The transferee shall execute, for a term ending on the expiration date of this Agreement and with such successor terms as may be provided by this Agreement, the standard form franchise agreement then being offered to new System franchisees and other ancillary agreements as we may require for the Franchised Business, which agreements shall supersede this Agreement and its ancillary documents in all respects and the terms of which agreements may differ from the terms of this Agreement, including, without limitation, the then-current System-wide Royalty Fee, Brand Development Fee or marketing expenditure requirement; provided, however, that the transferee shall not be required to pay any initial franchise fee;
- (g) The transferee, at its expense, shall renovate, modernize and otherwise upgrade the Franchised Business and, if applicable, any delivery vehicles to conform to the then-current standards and specifications of the System, and shall complete the upgrading and other requirements which conform to the System-wide standards within the time period reasonably specified by us;
- (h) The transferor shall remain liable for all of the obligations to us in connection with the Franchised Business incurred prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by us to evidence such liability;
- (i) At the transferee's expense, the transferee, the transferee's general manager and/or any other applicable personnel shall complete any training programs then in effect for franchisees upon such terms and conditions as we may reasonably require;
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to Bb.Q Chicken's 2025 Franchise Disclosure Document, a key condition for transferring a franchise is that the transferee must assume all obligations of the existing franchise agreement. Specifically, the transferee is required to enter into a written agreement that makes them fully liable for all the duties outlined in the original agreement from the date of transfer. This includes both joint and several liability, ensuring Bb.Q Chicken can pursue any party for full performance of the agreement. If the transferee is a corporation or partnership, its shareholders or partners must also guarantee the performance of these obligations.
This requirement protects Bb.Q Chicken by ensuring that any new franchisee is fully committed to upholding the standards and responsibilities of the franchise system. It also aligns with standard franchising practices, where franchisors typically require transferees to step into the shoes of the original franchisee. By assuming all obligations, the transferee demonstrates their commitment to the brand and its operational requirements.
However, the transferee will be required to execute Bb.Q Chicken's then-current standard form franchise agreement, which will supersede the original agreement. The terms of the new agreement may differ from the original, potentially including adjustments to the royalty fee, brand development fee, or marketing expenditure requirements. Despite this, the transferee will not be required to pay an initial franchise fee. This ensures that Bb.Q Chicken can update its franchise agreements to reflect current system standards while maintaining a consistent level of commitment from all franchisees.
Bb.Q Chicken may reasonably refuse consent to a transfer unless all obligations are assumed by the transferee. The franchisor must also be reasonably satisfied that the transferee meets all of its requirements for new multi-unit operators. These requirements include good reputation and character, business acumen, operational ability, management skills, and financial strength. The transferee must also execute Bb.Q Chicken's standard form of Multi-Unit Operator Agreement, Franchise Agreements for all Franchised Businesses open or under construction, and any other then-current ancillary agreements required by Bb.Q Chicken of new multi-unit operators on the date of transfer.