Does the Beggars Pizza franchise agreement specify that a transfer includes pledging or encumbering any direct or indirect interest?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.2 Franchisee's Conditional Right to Transfer. Franchisee understands and acknowledges that the rights and duties set forth in the Agreement are personal to Franchisee, and that Franchisor has granted this franchise in reliance on Franchisee's (or, if Franchisee is a corporation, partnership, or limited liability company, its principals') business skill, financial capacity, and personal character. Accordingly, neither Franchisee nor any immediate or remote successor to any part of Franchisee's interest in the Agreement, nor any individual, partnership, limited liability company, corporation, or other legal entity which directly or indirectly owns any interest in Franchisee or in the Restaurant will sell, assign, transfer, convey, pledge, encumber,
merge, or give away (collectively, "transfer") any direct or indirect interest in the Agreement, in Franchisee, or in all or substantially all of the assets of the Restaurant without the prior written consent of Franchisor. Any purported assignment or transfer not having the written consent of Franchisor required by this Section 14.2 will be null and void and will constitute a material breach of the Agreement, for which Franchisor may immediately terminate without opportunity to cure pursuant to Section 15.2.6.
- 14.3 Conditions of Transfer.
Franchisee must notify Franchisor orally and in writing sent by certified mail, return receipt requested, of any proposed transfer of any direct or indirect interest in the Agreement, in Franchisee, or in all or substantially all of the assets of the Restaurant (a) prior to Franchisee's offering for sale (including, without limitation, advertising the sale of the Restaurant, the Restaurant's assets, or any ownership interest in Franchisee), and (b) at least thirty (30) days before any transfer is proposed to take place.
Franchisor will not unreasonably withhold its consent to a transfer.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the franchise agreement addresses the transfer of interests. The agreement explicitly states that a transfer includes pledging or encumbering any direct or indirect interest in the franchise. This means that franchisees must obtain prior written consent from Beggars Pizza before selling, assigning, transferring, conveying, pledging, or encumbering any interest in the franchise agreement, the franchise itself, or the restaurant's assets.
This requirement is in place because Beggars Pizza grants the franchise based on the franchisee's personal skills, financial capacity, and character (or those of its principals). The franchisor wants to ensure that any new party taking over the franchise meets their standards. Failure to obtain consent for a transfer constitutes a material breach of the franchise agreement, potentially leading to immediate termination without an opportunity to cure the breach.
Before offering any interest for sale, a franchisee must notify Beggars Pizza both orally and in writing via certified mail, return receipt requested. This notification must occur at least 30 days before the proposed transfer. Beggars Pizza will not unreasonably withhold consent to a transfer, but this provision underscores the franchisor's control over who can operate a Beggars Pizza franchise and helps maintain brand consistency and quality.