Does the Carbones Pizzeria Franchisor have an obligation to the franchisee after termination when reselling the franchise?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination of this Agreement for any reason whatsoever, all rights and privileges granted by Franchisor hereunder shall immediately terminate, and in such event, Franchisee shall immediately pay to Franchisor all moneys owed to Franchisor, regardless of when due, without offset or reduction of any kind whatsoever. Furthermore, Franchisee shall immediately cease to use, by advertising or otherwise, the names "Carbone's Pizzeria" or "Carbone's Pizza" and any and all other of the Names and Marks. Franchisee shall immediately return to Franchisor all forms, advertising matter, bulletins, procedures, recipes, the Manual and any other manuals provided to Franchisee, and not retain any copies thereof. Franchisee shall in every manner otherwise refrain from performing any act or thing that would indicate that Franchisee is a franchisee of Franchisor. Upon termination for whatever reason, Franchisor shall be free, without any obligations whatsoever to Franchisee, to resell the franchise herein upon such terms and conditions as Franchisor shall desire, and Franchisor shall receive all proceeds of such a sale. Franchisor shall have the right, at the option of Franchisor, to purchase all inventory and usable merchandise identified with the Names and Marks, all of which may be repurchased by Franchisor at the fair wholesale market value thereof. Franchisee agrees that Franchisor may be irreparably harmed in a manner not readily compensated by money damages by any violation by Franchisee of the provisions of this Section, and accordingly Franchisor shall be entitled to injunctive relief from a court of competent jurisdiction to enforce the obligations of Franchisee hereunder, in addition to any other rights Franchisor may have at law or in equity under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, upon termination of the franchise agreement for any reason, Carbones Pizzeria has no obligations whatsoever to the franchisee when reselling the franchise. Carbones Pizzeria is free to resell the franchise on any terms and conditions it desires and will receive all proceeds from such a sale.
This means that if a franchisee's agreement is terminated, whether by the franchisee or Carbones Pizzeria, the franchisee will not be entitled to any compensation or consideration from the resale of the franchise to a new operator. Carbones Pizzeria retains full control over the resale process and benefits entirely from it.
This is a significant point for potential franchisees to consider. If the franchise is resold for a substantial amount, the terminated franchisee will not share in those profits, even if they contributed to the business's value. This clause underscores the importance of adhering to the franchise agreement to avoid termination and potential loss of any investment in the business.
Additionally, upon termination, the franchisee must immediately cease using the Carbones Pizzeria names and marks, return all materials, and refrain from any action indicating they are still a franchisee. Carbones Pizzeria also has the option to repurchase the franchisee's inventory at fair wholesale market value.