How does Bor Restoration define a 'transfer' of the franchise by the franchisee?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
| PROVISION | SECTION IN | SUMMARY |
|---|---|---|
| FRANCHISE AGREEMENT | ||
| AGREEMENT | misuse of the Marks or Proprietary Information, breach of curable covenants more than three times during the Initial Term or one time during Successor Franchise Term, illegal transfer, violation of laws applying to business, criminal or civil convictions, material misrepresentations, failure to obtain permission, failure to pay taxes, underreporting, complaints against the business, disparagement of us, failure to add new goods or Services, other violations of Franchise Agreement that contain their own cure provisions, failure to add new goods, Services or technology. We have the right to manage the Business temporarily. | |
| i. Franchisee's obligations on | 11 | Obligations include deidentification, payment of amounts due, cessation of |
| termination/non-renewal | use of trademarks and Proprietary Information, and return of all materials (see r. below). | |
| j. Assignment of contract by | 9 | No restriction on the franchisor's right to assign. |
| franchisor | 140 restriction on the franchisor saight to assign. | |
| k. "Transfer" by franchisee - | 9 | Sale, assignment, gift, pledge, mortgage, transfer because of dissolution of |
| defined | marriage, civil union or partnership, or other disposition of any part of the Franchise Agreement, ownership of the franchisee or the Business. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 33–35)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, a 'transfer' by the franchisee encompasses a broad range of actions related to the franchise agreement, ownership, or the business itself. This definition is important because it outlines the circumstances under which a franchisee needs to seek approval from Bor Restoration before making changes to the ownership or control of the franchise.
The FDD specifies that a transfer includes any sale, assignment, gift, pledge, or mortgage of any part of the Franchise Agreement, ownership of the franchisee, or the business. Furthermore, it extends to transfers occurring due to the dissolution of marriage, civil union, or partnership, as well as any other disposition of the franchise agreement, ownership, or the business. This comprehensive definition ensures that Bor Restoration retains control over who operates its franchises and maintains brand consistency.
This definition has significant implications for franchisees. Any action that could be interpreted as a transfer, even something like taking out a loan secured by the business assets or changing ownership percentages among partners, requires careful consideration and likely the franchisor's consent. Franchisees need to be aware of these restrictions to avoid inadvertently violating the franchise agreement and potentially facing penalties or termination. It is common practice in franchising for franchisors to have strict transfer requirements to protect their brand and ensure that new operators meet their standards.