Are the rights and duties in the Beehive Homes Franchise Agreement personal to the franchisee?
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.]
-
- Without the prior written consent of Bee Hive Homes, Assignor, Assignee, and Shareholders may not, either voluntarily or by operation of law, make or permit:
- a) any further transfer or assignment of the Franchise or the Franchise Agreement;
- b) any pledge or encumbrance of the Franchise;
- c) any assignment, transfer, or pledge of any equity interest in Assignee including, but not limited to, transfers in any entity that is a Shareholder;
- d) the creation of new or additional equity interests in Assignee; or
- e) any amendment of the terms of any organizational documents relating to Assignee.
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 original franchisee (Assignor) remains personally bound by the agreement. Specifically, the Assignor remains personally liable for any breaches of the Franchise Agreement, including both monetary obligations and the requirement to take or not take specific actions. After the assignment date, all references to the Franchisee in the Franchise Agreement refer to both the Assignor and the Assignee, jointly and severally. This means that even after transferring the franchise, the original franchisee retains responsibility for the franchise's performance and adherence to the agreement terms.
Furthermore, the Beehive Homes Franchise Agreement stipulates that without prior written consent from Beehive Homes, the Assignor, Assignee, and Shareholders cannot make or permit any further transfer or assignment of the franchise or the Franchise Agreement. They also cannot allow any pledge or encumbrance of the franchise, any assignment, transfer, or pledge of any equity interest in Assignee, the creation of new equity interests in Assignee, or any amendment of the terms of organizational documents relating to Assignee. These restrictions ensure that Beehive Homes maintains control over who operates its franchises and that the financial and operational integrity of the franchise is preserved.
This requirement protects Beehive Homes by ensuring that the initial franchisee remains invested in the success of the franchise even after assignment. It also allows Beehive Homes to carefully control future transfers, maintaining standards and protecting the brand. A prospective franchisee should carefully consider these conditions, as they could have long-term implications for their personal liability and ability to transfer the franchise in the future.