Can C3 Wellness Spa transfer its rights and obligations under the agreement in whole or in part?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
"Transfer" refers to and means and shall include, without limitation, the following, whether voluntary or involuntary, conditional or unconditional, and/or direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including,
Franchisor will have the option, but not the obligation, to assume or renew the Lease and the occupancy of the Leased Premises, including the right to sublease to another Franchisee of the C3 Wellness Franchise System, for all or any part of the remaining term of the Lease and, in connection with said assumption, Franchisor will not be obligated to pay to Landlord more than two months past due rent, real estate taxes and common area maintenance charges. In the event Franchisor assumes Tenant's leasehold interest in the Lease pursuant to the terms of this Agreement and subsequently assigns the Lease and its leasehold interest to an C3 Wellness franchisee approved by Landlord, Franchisor shall not be responsible for any obligations, debts, liabilities or payments arising and/or accruing under the Lease after the effective date of such assignment. Landlord agrees that any assignment of the Lease and Tenant's leasehold interests in the Lease by Tenant to Franchisor and/or assumption by Franchisor of the Lease and such leasehold interests shall not require Landlord consent and shall not require any payment of any assignment fee or similar charge or result in any increase in rent or other fees as a result of such assignment and/or assumption.
Assignee has the right and possesses full power and authority to take possession of the Leased Premises, to eject and expel Assignor from possession and occupancy of the Leased Premises and to terminate Assignor's right, title and interest in and to the Lease in the event of: (a) a default by Assignor under the terms of the Lease and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (b) a default by Assignor (in Assignor's capacity as an C3 Wellness franchisee) under the terms and conditions of the C3 Wellness Franchise Agreement between Assignor, as franchisee, and Assignee, as franchisor (the "Franchise Agreement"), and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (c) upon default of any agreement supporting or guaranteeing the Franchise Agreement; or (d) the expiration or termination of the Franchise Agreement.
Assignor agrees that Assignor will not and shall not permit, grant or suffer any termination, surrender or modification of the Lease without the prior written consent of Assignee.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, the definition of "Transfer" includes assignments, sales, gifts, transfers, pledges, or sub-franchises, whether voluntary or involuntary, conditional or unconditional, and/or direct or indirect. This indicates that the C3 Wellness Spa franchise agreement can be transferred under various circumstances.
Specifically, C3 Wellness Spa, as the franchisor, has the option to assume or renew the lease of the premises. This includes the right to sublease to another franchisee within the C3 Wellness Spa system. If C3 Wellness Spa assumes the lease and subsequently assigns it to an approved franchisee, C3 Wellness Spa will not be responsible for obligations arising after the assignment date. The landlord's consent is not required for the transfer of the lease to the franchisor, nor can they charge assignment fees or increase rent as a result.
Furthermore, if a franchisee (Assignor) defaults under the lease or the Franchise Agreement, C3 Wellness Spa (Assignee) has the right to take possession of the leased premises and terminate the franchisee's rights. The franchisee cannot terminate, surrender, or modify the lease without C3 Wellness Spa's prior written consent. This demonstrates C3 Wellness Spa's ability to manage and transfer lease obligations as part of the franchise agreement.