Is a pledge of the Bens Soft Pretzels franchise considered a transfer under the agreement?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that the following provisions govern any transfer or proposed transfer:
- A. Transfers. We have entered into this Agreement with specific reliance upon your financial qualifications, experience, skills and managerial qualifications as being essential to the satisfactory operation of the Store. Consequently, neither your interest in this Agreement nor in the
Store may be transferred or assigned to or assumed by any other person or entity (the "assignee"), in whole or in part, unless you have first tendered to us the right of first refusal to acquire this Agreement in accordance with subparagraph 11.F, and, if we do not exercise such right, unless our prior 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:
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels Franchise Disclosure Document, a pledge of the franchise is considered a transfer. The agreement specifies that neither the franchisee's interest in the agreement nor in the store can be transferred, assigned, or assumed by another person or entity without the franchisor's consent.
The Bens Soft Pretzels franchise agreement defines 'transfer' broadly to include not only outright sales but also other arrangements. This includes 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.
This means that if a franchisee pledges their Bens Soft Pretzels franchise as collateral, it is considered a transfer requiring franchisor approval. The franchisee must first offer Bens Soft Pretzels Franchising Corporation the right of first refusal to acquire the agreement. If the franchisor declines, the franchisee must obtain written consent, pay a transfer fee, and meet other transfer conditions outlined in the franchise agreement.