How is a 'transfer' defined in the Carbones Pizzeria franchise agreement?
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 'transfer' by the franchisee includes the transfer of the Franchise Agreement, the transfer of assets, or a change in ownership. This definition is important for prospective franchisees to understand because any of these actions would be subject to the franchisor's approval, as detailed in Section 13 of the Franchise Agreement. Carbones Pizzeria retains the right to approve all transfers, but the FDD states that approval will not be unreasonably withheld if all conditions for the transfer are met.
These conditions, outlined in Section 13(b) of the Franchise Agreement, include ensuring the new franchisee meets the franchisor's qualifications, paying a transfer fee, completing the required training, and securing a release from the current franchisee. Additionally, the new franchisee must sign the current agreement, although the terms of the new agreement may differ regarding fees or territory.
It is fairly standard practice in franchising for the franchisor to have approval over transfers to ensure brand consistency and that the new franchisee is capable of operating the business according to Carbones Pizzeria's standards. Franchisees should carefully review Section 13 of the Franchise Agreement to fully understand the requirements and potential implications of transferring their Carbones Pizzeria franchise.