What is considered a 'Transfer' of a Carbones Pizzeria franchise according to the agreement?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
h Franchisee's business, including the Restaurant, its operation, design, or construction, or otherwise, the sale of the Restaurant, the provision of any products or services, the hiring of any employees, and any advertising conducted by Franchisee. Such indemnification shall include reasonable attorneys' fees, costs of investigation or proof of facts, court costs, other litigation expenses, and travel and living expenses.
13. Transfer of Franchise.
a. Throughout the term of this Agreement and any extension thereof, Franchisee shall not at any time, directly or indirectly, sell, assign, mortgage, pledge, grant a security interest in, encumber, make a gift of, or otherwise transfer or dispose of Franchisee's interest in this Agreement, the Franchise, the Restaurant or its business or any entity that directly or indirectly owns an interest in any of the foregoing (collectively, a "Transfer") except in accordance with the provisions of this Agreement. Should Franchisee desire to engage in a Transfer, Franchisee must first give written notice to Franchisor of the intention to make such a Transfer, setting out the precise terms and conditions of such proposed Transfer. Franchisor shall have an option for sixty (60) days after the date of receipt of such written notice to purchase the interest then owned by Franchisee upon the same terms and conditions as those set forth in the required notice.
If Franchisor does not exercise the option granted to it, then Franchisee may thereafter engage in the Transfer described in the required notice during the thirty (30) days immediately following the expiration of the sixty (60) day period hereinabove described; provided that such Transfer is made on precisely the same terms and conditions as those specified in the notice required hereunder; and provided, further, that Franchisee obtains the prior written consent of Franchisor for the Transfer. Such Transfer shall not be made on terms and conditions other than those set forth in the notice required hereunder, no matter now slight such variance might be. If the Transfer does not occur within such additional thirty (30) day period, such interest shall thereafter again be subject to all of the restrictions of this Agreement with respect to any Transfer.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, a 'Transfer' encompasses a broad range of actions related to the franchise ownership. Specifically, it includes any direct or indirect sale, assignment, mortgage, pledge, granting of a security interest, encumbrance, gift, or any other form of transfer or disposal of the franchisee's interest in the Franchise Agreement, the franchise itself, the restaurant, its business, or any entity that directly or indirectly owns an interest in any of these aspects.
For a prospective Carbones Pizzeria franchisee, this definition is crucial because it outlines the restrictions and procedures one must follow if they wish to relinquish or alter their ownership stake in the franchise. Any action that falls under this definition of 'Transfer' requires the franchisee to first provide written notice to Carbones Pizzeria, detailing the precise terms and conditions of the proposed transfer. Carbones Pizzeria then has the option to purchase the franchisee's interest on the same terms.
Furthermore, if the franchisee is a corporation, limited liability company, or partnership, any event that results in a cumulative change in ownership of more than 50% of the equity or partnership interests (from the date the franchise was granted) is also deemed a Transfer. This clause is particularly important for franchisees operating under a business entity, as it ensures that Carbones Pizzeria retains control over significant changes in the ownership structure of its franchisees. A franchisee will not be charged a Transfer Fee if the franchise is transferred to a corporation or limited liability company that is solely owned by Franchisee.