Must the new Carbones Pizzeria franchisee sign the current agreement as a condition of transfer approval?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise Agreement | ||
| a. Length of the Franchise term | Section 2 | 10 years from date of signing the Franchise Agreement |
| b. Renewal or extension of the term | Section 2 (See Note 2) | One 10 year term |
| c. Requirements for franchisee to renew or extend | Section 2 | Sign new agreement (which may contain materially different terms and conditions than your original Franchise Agreement), pay renewal fee, update your Restaurant to meet our then-current requirements for new restaurants |
| d. Termination by franchisee | None | Not applicable |
| e. Termination by franchisor without | None | Not applicable |
| cause | ||
| f. Termination by franchisor with cause | Section 15 | We may terminate only if you do one of the things described in Section 15 |
| g. "Cause" defined – curable defaults | Sections 15(e) through 15(f) | You have 30 days to cure nonpayment of fees, sanitation problems, non submission of reports and any other default not listed in Section 15 |
| h. "Cause" defined – non-curable defaults | Sections 15(a) through 15(d) | Non curable defaults include abandonment, trademark misuse and conviction of an offense directly related to the Restaurant business |
| i. Franchisee's obligations on termination/nonrenewal | Section 16 | Obligations include complete de identification and payment of amounts due. (See also "Noncompetition covenants after the franchise is terminated or expires" below.) |
| j. Assignment of contract by franchisor | No restriction on our right to assign | |
| k. "Transfer" by franchisee – defined | Sections 13 and 14 | Includes transfer of Franchise Agreement or assets or ownership change |
| l. Franchisor's approval of transfer by franchisee | Section 13 | We have the right to approve all transfers but will not unreasonably withhold approval so long as all conditions to transfer have been satisfied |
| m. Conditions for franchisor approval of transfer | Section 13(b) | New franchisee qualifies, transfer fee paid, training completed, release signed by you and current agreement signed by new franchisee. (The new agreement may provide for different fees or territory than in your agreement, but we will not require the transferee to pay us a |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 24–26)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, a new franchisee must sign the current agreement as a condition of transfer approval. Specifically, the franchisor has the right to approve all transfers, provided that all conditions to transfer have been satisfied. One of these conditions is that the current agreement is signed by the new franchisee.
This requirement ensures that the new Carbones Pizzeria franchisee is legally bound by the terms and conditions of the franchise agreement. The agreement signed by the new franchisee may include different fees or territory arrangements than the original agreement. However, the franchisor states that they will not require the transferee to pay a new initial franchise fee.
This condition is a fairly standard practice in franchising, as it allows Carbones Pizzeria to maintain consistency and control over its brand and operations. It also protects the franchisor's interests by ensuring that the new franchisee is fully aware of their obligations and responsibilities. Prospective franchisees should carefully review the franchise agreement and any related documents before signing to understand the terms and conditions of the transfer.