Must a proposed transferee meet Better Blend's standards for new franchisees?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
anchisee's taxes and other liabilities are paid. BBF may assign this purchase option to another party.
ARTICLE 15. TRANSFERS
- 15.1 By BBF. BBF may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and BBF may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that BBF entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing BBF at least 60 days prior notice of the proposed Transfer, and without obtaining BBF's consent. In granting any such consent, BBF may impose conditions, including, without limitation, the following:
- (i) BBF receives a transfer fee equal to $17,500 plus any broker fees and other out-ofpocket costs incurred by BBF;
- (ii) the proposed Transferee and its owners have completed BBF's franchise application processes, meet BBF's then-applicable standards for new franchisees, and have been approved by BBF as franchisees;
- (iii) the proposed Transferee is not a Competitor;
- (iv) the proposed Transferee executes BBF's then-current form of franchise agreement and any related documents, which form may contain materially different provisions
- than this Agreement (provided, however, that the form will be amended to provide that the proposed Transferee will not be required to pay an initial franchise fee);
- (v) all owners of the proposed Transferee provide a guaranty in accordance with Section 2.5;
- (v
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise to another party, the proposed transferee must meet Better Blend's standards for new franchisees. Specifically, the proposed transferee and its owners must complete Better Blend's franchise application processes, meet the then-applicable standards for new franchisees, and be approved by Better Blend as franchisees. This requirement ensures that any new operator brought into the Better Blend system is qualified and capable of maintaining the brand's standards.
In addition to meeting the standards for new franchisees, the transferring franchisee must also pay Better Blend a transfer fee of $17,500, plus any broker fees and out-of-pocket costs incurred by Better Blend. The proposed transferee must not be a competitor and must execute Better Blend's then-current form of franchise agreement, which may contain materially different provisions than the original agreement. All owners of the proposed transferee must also provide a guaranty.
Furthermore, the franchisee must have paid all monetary obligations to Better Blend and its affiliates, as well as to any lessor, vendor, supplier, or lender to the business, and must not be in default or breach of the agreement. The proposed transferee and its owners and employees must undergo any training that Better Blend may require. Both the franchisee, its owners, and the transferee and its owners must execute a general release of Better Blend in a form satisfactory to Better Blend. Finally, the business must fully comply with all of Better Blend's most recent System Standards. These conditions ensure that the transfer process is thorough and protects the interests of Better Blend and its franchisees.
These transfer requirements are fairly typical in franchising. Franchisors want to ensure that anyone taking over a unit is well-qualified and financially stable. The transfer fee compensates Better Blend for their time and expenses in reviewing and approving the transfer. The new franchisee signing the then-current franchise agreement is also a common practice, as it allows the franchisor to keep all units under the same, up-to-date agreement.