Is a lease of the Bens Soft Pretzels store considered a transfer under the agreement?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
rior written consent is obtained, the transfer fee provided for in subparagraph 11.C is paid, and the transfer conditions described in subparagraph 11.D are satisfied. Any sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, assignment, bequest, gift or otherwise, or any arrangement pursuant to which you turn over all or part of the daily operation of the business to a person or entity who shares in the losses or profits of the business in a manner other than as an employee will be considered a transfer for purposes of this Agreement. Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Paragraph 11:
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- Any change in the percentage of the franchisee entity owned, directly or indirectly, by any Owner (including any addition or deletion of any person or entity who qualifies as an Owner) that results in a 20% or more change of ownership interest;
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- Any change in the general partner of a franchisee that is a general, limited or other partnership entity;
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- For purposes of this subparagraph 11.A, a pledge or seizure of any ownership interests in you or in any Owner that affects the ownership of 20% or more of you or any Owner, which we have not approved in advance in writing; or
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- Any grant of a security interest in, or otherwise encumbrance of, any of the assets or securities of you, including the Store unless you satisfy our requirements. Such requirements may include execution of an agreement by the secured party in which it acknowledges the creditor's obligations, and agrees that in the event of any default by you under any documents related to the security interest, we shall have the right and option (but not the obligation) to be substituted as obligor to the secured party and to cure your default; and, in the event we exercise such option, any acceleration of indebtedness due to your default shall be void.
In the event of your insolvency or the filing of any petition by or against you under any provisions of any bankruptcy or insolvency law, if your legal representative, successor, receiver or trustee desires to succeed to your interest in this Agreement or the business conducted hereunder, such person first must notify us, tender the right of first refusal provided for in subparagraph 11.F, and if we do not exercise such right, must apply for and obtain our consent to the transfer, pay the transfer fee provided for in subparagraph 11.C, and satisfy the transfer conditions described in subparagraph 11.D. In addition, you or the assignee must pay the attorneys' fees and costs that we incur in any bankruptcy or insolvency proceeding pertaining to you.
You may not place in, on or upon the location of the Store, or in any communication media or any form of advertising, any information relating to the sale of the Store or the rights under this Agreement, without our prior written consent.
B. Consent to Transfer. We will not unreasonably withhold our consent to transfer, provided we determine that all of the conditions described in this Paragraph 11 have been satisfied.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
According to Bens Soft Pretzels' 2025 Franchise Disclosure Document, certain arrangements, including a lease, can be considered a transfer under the franchise agreement. Specifically, any lease or arrangement where the franchisee turns over all or part of the daily operation of the business to another party who shares in the losses or profits (other than as an employee) is considered a transfer. This means that if a franchisee leases their Bens Soft Pretzels store to someone else who then operates the business and shares in the profits or losses, it would be classified as a transfer under the agreement.
This classification as a transfer triggers certain requirements and restrictions outlined in the franchise agreement. The franchisee must first offer Bens Soft Pretzels the right of first refusal to acquire the agreement. If Bens Soft Pretzels declines, the franchisee must then obtain Bens Soft Pretzels' prior written consent for the transfer. Additionally, a transfer fee, equal to 50% of the then-current initial franchise fee, must be paid. The franchisee must also ensure that the proposed transferee meets Bens Soft Pretzels' current requirements for franchisees and signs the then-current franchise agreement.
Furthermore, all outstanding amounts owed to Bens Soft Pretzels, its affiliates, suppliers, or the landlord must be paid in full. The franchisee must also be up-to-date on all required reports. Compliance with modernization requirements for the store is also necessary. Finally, the franchisee, owners, and guarantors must sign a general release of all claims related to the agreement and the store. The new operator must also complete the required training.
These stipulations ensure that Bens Soft Pretzels maintains control over who operates its franchises and that the brand's standards are upheld even when a store changes hands. Franchisees need to be aware of these conditions before considering any arrangement that could be construed as a transfer, such as a lease, to avoid violating the franchise agreement.