If a transfer occurs, what rights does Carbones Pizzeria have?
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.
- b. Franchisor, if it does not exercise its right of first refusal, will not unreasonably withhold consent to the Transfer of Franchisee's interest, but if any of the following conditions are not satisfied (without particular limitation to the following list) Franchisor shall be deemed to have reasonable grounds for withholding such consent:
- (1) Franchisor must be satisfied that the prospective purchaser has sufficient business qualifications and will comply with Franchisor's then current training requirements;
- (2) The prospective purchaser must execute such agreements as are being required of Franchisor's new franchisees at the time of the Transfer and the Franchisee must execute a general release in the form required by Franchisor;
- (3) Franchisee shall not be in default in the payment of any amounts owed Franchisor;
- (4) Franchisee shall have paid a transfer fee to Franchisor of Five Thousand Dollars ($5,000) (the "Transfer Fee") at the time it seeks Franchisor's consent to the Transfer; and
- (5) The transferee and its employee(s), as required by Franchisor, shall have completed Franchisor's initial training program prior to the closing of the Transfer.
- c. For the purposes of this Agreement, if Franchisee is a corporation, limited liability company or a partnership, any event which results in a cumulative change in ownership of the interests in the equity securities
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, if a franchisee desires to transfer their interest in the franchise, they must first provide written notice to Carbones Pizzeria, including the precise terms and conditions of the proposed transfer. Carbones Pizzeria then has an option for sixty (60) days to purchase the franchisee's interest under the same terms and conditions outlined in the notice. This is known as a right of first refusal, which is a common provision in franchise agreements.
If Carbones Pizzeria chooses not to exercise its option to purchase the franchise, the franchisee has thirty (30) days following the expiration of the sixty-day period to proceed with the transfer, but only under the exact same terms and conditions as initially notified. Additionally, the franchisee must obtain Carbones Pizzeria's prior written consent for the transfer. If the transfer does not occur within that thirty-day window, the interest is again subject to all transfer restrictions outlined in the agreement.
Carbones Pizzeria will not unreasonably withhold consent to the transfer if it declines to exercise its right of first refusal, but there are conditions that must be met. Carbones Pizzeria must be satisfied that the prospective purchaser has sufficient business qualifications and will comply with the then-current training requirements. The purchaser must also execute agreements required of new franchisees at the time of transfer, and the franchisee must execute a general release in the form required by Carbones Pizzeria. The franchisee must not be in default of any payments owed to Carbones Pizzeria and must have paid a $5,000 transfer fee. Finally, the transferee and their employees, as required by Carbones Pizzeria, must complete the initial training program before the transfer is finalized. If the franchisee is a corporation, limited liability company, or partnership, a cumulative change in ownership of more than 50% is considered a transfer, giving rise to all rights Carbones Pizzeria has upon transfer. However, a transfer fee will not be charged if the franchise is transferred to a corporation or limited liability company solely owned by the franchisee.