Can a Casiola Franchisee transfer any ownership interest without the Franchisor's written consent?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees, and, Franchisee represents and warrants that Franchisee's Owners understand and agree, that the rights and duties set forth in this Agreement are personal to Franchisee and each Owner. Therefore, Franchisee agrees that:
- (1) No ownership interest of any Owner in Franchisee may be Transferred without the prior written consent of Franchisor;
- (2) No obligations, rights or interest of Franchisee in (a) this Agreement, (b) the Franchised Business, or (c) all or substantially all of the assets of the Franchised Business may be Transferred without the prior written consent of Franchisor. This restriction shall not prohibit Franchisee from granting a mortgage, charge, lien, or security interest in the assets of the Franchised Business or this Agreement for the exclusive purpose of securing financing for the initial development (occurring prior to the Actual Opening Date) of the Franchised Business;
- (3) Without limitation to the foregoing, any Transfer by Franchisee respecting and/or relating to this Agreement and/or the Franchised Business and/or assets associated with the Franchised Business will require the prior written consent of Franchisor where such Transfer occurs by virtue of: (a) divorce or legal dissolution of marriage; (b) insolvency; (c) dissolution of a Corporate Entity; (d) last will and testament; (e) intestate succession; or (f) declaration of, or transfer in trust;
- (4) Any purported Transfer without the written consent of Franchisor, or otherwise in violation of this Agreement including, but not limited to this Article 14.B. shall constitute a breach of this Agreement and shall convey to the transferee no rights or interests in this Agreement; and
- (5) In the event of a Transfer of this Agreement that is approved by Franchisor, Franchisee shall not be relieved of Franchisee's obligations under this Agreement whether said obligations accrued and/or arose prior to and/or after the date of Transfer.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, a franchisee cannot transfer any ownership interest without prior written consent from Casiola. This restriction applies to any transfer of ownership interest by an owner in the franchise. Additionally, the franchisee cannot transfer any obligations, rights, or interests in the Franchise Agreement, the franchised business, or substantially all of the assets of the franchised business without Casiola's prior written consent.
This requirement for written consent extends to various scenarios, including transfers occurring due to divorce, legal dissolution of marriage, insolvency, dissolution of a corporate entity, last will and testament, intestate succession, or transfers in trust. Any transfer attempted without Casiola's written consent or in violation of the Franchise Agreement will be considered a breach of the agreement and will not grant any rights or interests to the transferee.
Even if a transfer of the Franchise Agreement is approved by Casiola, the franchisee remains responsible for all obligations under the agreement, whether those obligations arose before or after the transfer date. This ensures that the original franchisee is not relieved of their duties simply by transferring the franchise to someone else.
Casiola's right of first refusal gives them the option to purchase the franchisee's interest under the same terms as a third-party offer. If Casiola waives this right, the franchisee can proceed with the transfer to the third party, provided the sale is completed within 120 days and there are no material changes to the terms. This process ensures that Casiola maintains control over who becomes a franchisee and protects the brand's interests.