In the event of a transfer of the Casiola agreement approved by the franchisor, is the franchisee relieved of their obligations under the agreement?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
ll trade, supplier, and vendor accounts and other debts, of whatever nature or kind, in a timely manner;
- (3) Franchisee and each Owner must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee shall personally execute the Franchise Owner Agreement and Guaranty in the form attached to this Agreement as Exhibit 1;
- (5) All obligations of Franchisee under this Agreement, the Ancillary Agreements, and all applicable Rental Agreements shall be assumed by the transferee and each individual owner of transferee in a manner satisfactory to Franchisor;
- (6) Franchisee and each Owner must execute the General Release attached to this Agreement as Exhibit 5 releasing Franchisor, Franchisor's affiliates and Franchisor's past and present officers, directors, shareholders, members, partners, agents, representatives, independent contractors, servants and employees, of any and all claims against Franchisor for matters arising on, or before, the effective date of the Transfer;
- (7) If the proposed Transfer includes or entails the Transfer of this Agreement, substantially all of the assets of the Franchised Business, a controlling interest in Franchisee, or is one of a series of Transfers which in the aggregate Transfers substantially all of the assets of the Franchised Business or a controlling interest in Franchisee, then, at the election of Franchisor and upon notice from Franchisor to Franchisee, the transferee may be required to execute (and/or, upon Franchisee's request, shall cause all interested parties to execute) for a term ending on the expiration date of the original Term of this Agreement, the then current standard form Franchise Agreement offered to new franchisees of Casiola Businesses and any other agreements as Franchisor requires. Such agreements shall supersede this Agreement and its associated agreement in all respects, and the terms of Franchisor's then current agreements may differ from the terms in this Agreement, provided that such agreements shall provide for the same Royalty Fee, Advertising Contributions, and all other financial or monetary obligations established in this Agreement;
- (8) The transferee, at its expense, must improve, modify, refurbish, renovate, remodel, and/or otherwise upgrade Franchisee's non-residential Administrative Office to conform to the then current standards and specifications of Franchisor, and the transferee must complete such improvements, modifications, refurbishments, renovations, remodeling, and/or upgrading within the time period Franchisor reasonably specifies;
- (9) Franchisee and each Owner shall remain liable for all obligations to Franchisor set forth in this Agreement;
- (10) At the transferee's expense, the transferee, and the transferee's Managing Owner, managers and/or any other applicable employees of transferee's Casiola Business must complete any training programs then in effect for franchisees of Casiola Businesses upon terms and conditions set forth in this Agreement or as Franchisor otherwise reasonably requires;
- (11) Franchisee must pay a fixed sum of $10,000 to Franchisor (the "Transfer Fee");
- (12) Franchisor's approval of the material terms and conditions of the Transfer, and Franchisor determines in Franchisor's Reasonable Business Judgment that the price and terms of payment are not so burdensome as to be detrimental to the future operations of the Franchised Business by the transferee;
- (13) Transferee's employees, directors, officers, independent contractors, and agents who will have
access to Confidential Information shall execute the Confidentiality Agreement attached hereto as Exhibit 2;
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, a franchisee is not fully relieved of all obligations upon transferring the franchise agreement, even with the franchisor's approval. Specifically, the franchisee and each owner remain liable for all obligations to Casiola as outlined in the franchise agreement. This indicates that certain liabilities and responsibilities may extend beyond the transfer date.
To ensure a smooth transfer, several conditions must be met. The transferee must assume all obligations of the franchisee under the agreement, ancillary agreements, and rental agreements in a manner satisfactory to Casiola. Additionally, the franchisee and each owner must execute a General Release, releasing Casiola from any claims arising on or before the transfer date. The transferee must also complete any required training programs and, at their expense, upgrade the administrative office to meet Casiola's current standards.
Furthermore, upon the transfer of the agreement, the franchisee must immediately cease operating the Casiola business under the Casiola system, except as directed by Casiola for wind-down activities. The franchisee must also take necessary actions to cancel any assumed names related to the licensed marks and assign all booking systems, data, customer lists, and digital media accounts to Casiola. All obligations that are intended to survive the transfer of the Agreement shall continue in full force and effect subsequent to the Agreement's transfer until such obligations are satisfied in full or, by the nature and/or terms, such obligation(s) expire. These continuing obligations highlight that the transfer process involves several steps to ensure compliance and a smooth transition.