Is pledging the Beef O Bradys Franchise Agreement considered a 'Transfer'?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Agreement, the term "Transfer" includes your (or your Owners') voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) you; (b) this Agreement; or (c) the Family Sports Pub.
An assignment, sale, gift or other disposition includes the following events: (i) transfer of or change in ownership of capital stock or a partnership interest; (ii) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you; (iii) any issuance or sale of your stock or any security convertible to your stock; (iv) transfer of an interest in you, this Agreement or the Family Sports Pub in a divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law; (v) transfer of an interest in you, this Agreement or the Family Sports Pub, in the event of your death or the death of one of your Owners, by will, declaration of or transfer in trust or under the laws of intestate succession; or (vi) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the Family Sports Pub or your transfer, surrender or loss of possession, control or management of the Family Sports Pub.
Source: Item 23 — RECEIPTS. (FDD pages 66–330)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, pledging the Franchise Agreement is considered a 'Transfer'. The FDD specifies that the rights and duties within the agreement are personal to the franchisee, and Beef O Bradys grants the franchise based on their assessment of the franchisee's character, skills, and financial capacity.
For a prospective franchisee, this means that any transfer of interest in the agreement requires prior written approval from Beef O Bradys. This includes not only direct transfers like selling the franchise but also indirect transfers such as changes in ownership, mergers, or the issuance of additional securities.
Specifically, the document states that pledging the Franchise Agreement or an ownership interest in the franchise as security is considered a form of transfer. If a franchisee were to default on a loan secured by the franchise agreement, leading to foreclosure, this would also be classified as a transfer. Any transfer without Beef O Bradys's approval constitutes a breach of the agreement and is considered void.