What constitutes a prohibited transfer of interest in the Bojangles franchise agreement that could lead to termination?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
- E.
Upon the death or mental incapacity of any person with a direct or indirect interest in this Agreement or in Franchisee, the executor, administrator, or personal representative of such person shall transfer the interest to a third party, including shareholder(s) or member(s) of Franchisee, approved by Franchisor within twelve (12) months after such death or mental incapacity, or, if legal proceedings make transfer within twelve (12) months not feasible, within such longer period as may be reasonable under the circumstances.
Such transfer, including, without limitation, transfer by devise or inheritance, shall be subject to the same conditions as any inter vivos transfer.
If an approved transfer has not been made within the aforementioned period, Franchisor shall have the option to purchase the Franchised Business at fair market value, and thereupon terminate this Agreement.
In the event that Franchisor elects to purchase the Franchised Business and terminate this Agreement in accordance with the foregoing, closing of the transaction shall take place as promptly as possible after Franchisor exercises its option to purchase, and the parties reach agreement concerning the fair market value of the Franchised Business.
Payment will be made in four (4) installments, the first of which shall be made at the time of closing and the remaining three (3) installments shall each be made at one (1) year intervals from the date of the first payment.
Interest shall be payable on the unpaid portion of the purchase price on the due date of each installment of principal at the prime rate of Bank of America on the date of Franchisor's election to purchase the Franchised Business. If the parties are unable to agree on the fair market value of the Franchised Business, then the dispute will be settled by binding arbitration in Charlotte, North Carolina, in accordance with the rules and procedures of the American Arbitration Association.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, a prohibited transfer of interest in the franchise agreement can occur upon the death or mental incapacity of a person with interest in the agreement. In such cases, the executor, administrator, or personal representative must transfer the interest to a third party approved by Bojangles within twelve months. This transfer is subject to the same conditions as any other transfer made during the person's lifetime.
If the transfer is not completed within the specified timeframe and approved by Bojangles, the company has the option to purchase the franchised business at fair market value. If Bojangles exercises this option, the franchise agreement will be terminated.
The purchase amount will be paid in four installments. The first installment is due at closing, with the remaining three paid annually from the date of the first payment. Interest accrues on the unpaid balance at the prime rate of Bank of America on the date Bojangles elects to purchase the business. If the parties cannot agree on the fair market value, the dispute will be settled through binding arbitration in Charlotte, North Carolina, following the American Arbitration Association's rules.