What agreement must the Bee Organized franchisee sign when transferring the franchise agreement to a wholly-owned corporate entity?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event Franchisee is an individual/are individuals, this Agreement may be Transferred by Franchisee to a Corporate Entity (the "Assignee Corporate Entity"), provided that: (a) Franchisee has provided Franchisor with 30 days prior written notice of the proposed Assignment of this Agreement; (b) Franchisee (individually, jointly and severally as to each individual Franchisee) shall sign and be bound by the Franchise Owner and Spouse Agreement and Guaranty attached to this Agreement as Exhibit 1; (c) the Spouse of each Franchisee (individually, jointly and severally as to each individual Spouse) sign and be bound by the Franchise Owner and Spouse Agreement and Guaranty attached to this Agreement as Exhibit 1; (d) Franchisee has provided Franchisor with true and accurate copies of corporate formation documents related to the Assignee Corporate Entity and the ownership of the Assignee Corporate Entity and has further provided Franchisor with all additional documentation as Franchise may request concerning the proposed assignment and/or Assignee Corporate Entity; and (e) Franchisee is otherwise in compliance with the terms and conditions of this Agreement and any Ancillary Agreements. Franchisee agrees that an assignment to an Assignee Corporate Entity shall not relieve Franchisee of Franchisee's individual obligations under this Agreement as such obligations existed between Franchisee and Franchisor prior to the date of any assignment to the Assignee Corporate Entity.
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, if a franchisee is an individual and wants to transfer the franchise agreement to a wholly-owned corporate entity, both the franchisee and their spouse must sign and be bound by the Franchise Owner and Spouse Agreement and Guaranty. This agreement is attached to the Franchise Agreement as Exhibit 1.
This requirement ensures that the original franchisee (and their spouse) remain personally liable for the obligations under the Franchise Agreement even after the transfer to the corporate entity. Bee Organized also requires that they receive 30 days' prior written notice of the proposed assignment. The franchisee must also provide true and accurate copies of corporate formation documents related to the Assignee Corporate Entity and the ownership of the Assignee Corporate Entity and must further provide Bee Organized with all additional documentation as Franchise may request concerning the proposed assignment and/or Assignee Corporate Entity.
This is a fairly standard practice in franchising, as franchisors want to ensure that the individuals behind the business are still committed to the franchise and are held accountable for its performance. The Franchise Owner and Spouse Agreement and Guaranty likely contains provisions that protect Bee Organized's interests and ensure compliance with the franchise agreement.
Prospective franchisees should carefully review Exhibit 1 and understand the obligations and liabilities they will be undertaking, even after transferring the franchise to a corporate entity. It is recommended to seek legal counsel to fully understand the implications of signing this agreement.