If a transfer of interest in a Bojangles franchise would result in a change of controlling interest, what options does the Franchisor have?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
(3) If a transfer, alone or together with other previous, simultaneous, or proposed transfers, would have the effect of transferring a controlling interest in the right to operate the Restaurant, interest in this Agreement, or in the franchise rights or license rights granted hereunder, or in Franchisee, Franchisor may, in its sole discretion, if it does not elect to exercise its option to purchase set forth in Paragraph XV.D. herein, require any or all of the following as conditions of its approval:
(a) All of Franchisee's accrued and outstanding monetary obligations to third parties and all accrued and outstanding obligations to Franchisor, or any parent, subsidiary or affiliate of Franchisor shall have been satisfied;
(b) Franchisee shall not be in default of any provision of this Agreement, any amendment hereto or successor hereof, or any other agreement between Franchisee and Franchisor, it parents, subsidiaries, or affiliates;
(c) The transferor shall have executed a general release under seal, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its officers, directors, shareholders or members, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances; and shall agree to remain liable to Franchisor for all affirmative obligations, covenants, and agreements contained herein for two (2) years following the effective date of transfer (or, if transferor retains a purchase money interest in the transferred business, for a period greater than two (2) years, until the interest is extinguished) or for such shorter period as Franchisor may, in its sole discretion, determine;
- (d) The transferee shall enter into a written assignment, under seal and in a form satisfactory to Franchisor, assuming and agreeing to discharge all of Franchisee's obligations under this Agreement; and, if the obligations of Franchisee were guaranteed by the transferor, the transferee shall guarantee the performance of all such obligations in writing in a form satisfactory to Franchisor; [Item 22: CONTRACTS]
- C.
Franchisor shall have the option to purchase any interest in the Restaurant or this Agreement as follows:
- (1) Any party holding any direct or indirect interest in the Restaurant, in this Agreement or in Franchisee who desires to accept any bona fide offer from a party other than Franchisor to purchase such interest, if a transfer of that interest alone or together with other previous, simultaneous or proposed transfers would have the effect of transferring a controlling interest in the Restaurant, in this Agreement, or in Franchisee, shall provide Franchisor with all of the terms of the proposed transfer in writing at least sixty (60) days prior to the proposed date of transfer.
Franchisor shall have the right and option, exercisable within thirty (30) days after receipt of all documentation necessary, in Franchisor's sole but reasonable opinion, to evaluate the terms of the proposed transfer, to send written notice to the seller that Franchisor intends to purchase the seller's interest on the same terms and conditions offered by the third party, net of any finders or brokers fees which any third party would be obligated to pay.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, if a transfer of interest would result in a change of controlling interest in the restaurant, the agreement, or the franchise rights, Bojangles has options. Bojangles may choose not to exercise its option to purchase the interest. If Bojangles does not exercise that option, it can require certain conditions be met for approval of the transfer.
These conditions include ensuring that all of the franchisee's outstanding monetary obligations to third parties and Bojangles (or its affiliates) are satisfied. The franchisee must not be in default of any provision of the Franchise Agreement or any other agreement with Bojangles or its affiliates. The transferor must execute a general release of all claims against Bojangles and its personnel, agreeing to remain liable for obligations for two years after the transfer, or longer if they retain a purchase money interest. The transferee must also enter into a written assignment, agreeing to fulfill all of the franchisee's obligations under the Franchise Agreement, and guarantee those obligations if they were previously guaranteed by the transferor.
Bojangles also has the option to purchase any interest in the restaurant or the agreement. If a party desires to accept an offer from someone other than Bojangles that would transfer a controlling interest, they must provide Bojangles with the terms of the proposed transfer in writing at least 60 days before the transfer date. Bojangles then has 30 days after receiving all necessary documentation to decide whether to purchase the interest on the same terms offered by the third party, minus any finder's or broker's fees. If Bojangles elects to purchase the interest, the closing must occur within 30 days of their notice to the seller.
These stipulations are typical in franchise agreements to ensure that the franchisor maintains control over who operates their franchises and that any new operators meet their standards and financial obligations. A prospective franchisee should carefully consider these conditions and timelines, as they can significantly impact the ability to sell or transfer their Bojangles franchise in the future.