After the date of assignment, who does the term 'Franchisee' refer to in the Beehive Homes Franchise Agreement?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- Assignor agrees to remain personally bound by, and personally liable for the breach of, each and every provision of the Franchise Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, and is not released from any obligations to Bee Hive Homes by this Assignment. After the date of this Assignment, all references to Franchisee in the Franchise Agreement shall refer to both Assignor and Assignee both jointly and severally.
[Alternate paragraph to be used for Assignment to Corporation.]
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, in the event of an assignment of the Franchise Agreement, the term 'Franchisee' refers to both the Assignor (the original franchisee) and the Assignee (the new franchisee). This means that both parties are jointly and severally responsible for fulfilling the obligations outlined in the Franchise Agreement.
This has significant implications for both the original franchisee (Assignor) and the new franchisee (Assignee). The Assignor remains personally bound by and liable for any breaches of the Franchise Agreement, even after the assignment. This includes both monetary obligations and obligations to take or refrain from specific actions. The Assignee, on the other hand, must pay all fees and perform all obligations under the Franchise Agreement from the date of assignment.
The joint and several liability clause means that Beehive Homes can seek recourse from either the Assignor or the Assignee for any failure to comply with the Franchise Agreement. This provides Beehive Homes with added security and ensures that the obligations of the franchise are met. For example, if the Assignee fails to pay royalties, Beehive Homes can pursue the Assignor for the unpaid amount.
This arrangement is somewhat unusual in franchising, as typically the assignor is released from liability upon a valid assignment. Prospective franchisees should carefully consider the implications of this ongoing liability before assigning their franchise. They should also ensure that the Assignee is financially stable and capable of fulfilling the obligations of the Franchise Agreement to minimize the risk of future liability.