If a Carls developer is an individual or partnership transferring the agreement to a newly formed corporation or LLC, is a transfer fee required?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- D. If Developer is an individual or a partnership and desires to Transfer this Agreement to a corporation (or limited liability company) formed for the convenience of ownership, the requirements of Section 10.B. shall apply to such a Transfer, however, Developer will not be required to pay a Transfer fee.
CJR's consent also will be conditioned on the following: (1) the corporation (or limited liability company) must be newly organized; (2) prior to the Transfer, CJR must receive a copy of the documents specified in Section 8.B. and the transferee shall comply with the remaining provisions of Section 8; and (3) Developer must own all voting securities of the corporation (or membership interests of the limited liability company) or, if Developer is owned by more than one individual, each person shall have the same proportionate ownership interest in the corporation (or the limited liability company) as prior to the Transfer.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a developer is an individual or partnership and wants to transfer the Development Agreement to a newly formed corporation or limited liability company (LLC) for ownership convenience, they will not be required to pay a transfer fee.
However, this transfer is contingent on certain conditions. First, the corporation or LLC must be newly organized. Second, Carls must receive copies of specific documents, and the transferee must comply with the provisions outlined in Section 8 of the agreement. Finally, the developer must own all voting securities of the corporation or membership interests of the LLC, maintaining the same proportionate ownership as before the transfer.
This policy provides a benefit to Carls developers who wish to change their business structure for convenience without incurring additional fees, as long as they meet the specified requirements. It is important for prospective developers to understand these conditions to avoid any unexpected costs or complications during a transfer.