Can the Franchisor charge a fee for managing a Casiola business after the death or disability of the franchisee?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
(1) If Franchisee is an individual and not a Corporate Entity, upon the death or permanent disability of Franchisee, the executor, administrator, conservator or other personal representative of Franchisee, must appoint a manager that meets the equivalent of an Operating Manager within a reasonable time, which shall not exceed 30 days from the date of death or permanent disability. The appointed manager (as applicable) must serve and qualify as an Operating Manager and attend and successfully complete the Training Program within 60 days of the appointment. If Franchisee's Casiola Business is not being managed by a Franchisor approved Operating Manager (as applicable) within 30 days after such death or permanent disability, Franchisor is authorized, but is not required, to immediately appoint a manager to maintain the operations of Franchisee's Casiola Business for, and on behalf of, Franchisee at Franchisee's sole costs until an approved Operating Manager is able to assume the management and operation of Franchisee's Casiola Business. Franchisor's appointment of a manager for Franchisee's Casiola Business does not relieve Franchisee of its obligations under this Agreement, including this Article 14.D., or constitute a waiver of Franchisor's right to terminate this Agreement pursuant to Article 16, below. At all times, including while Franchisee's Casiola Business may be managed by Franchisor's appointed manager, Franchisor shall not be liable for any debts, losses, costs, or expenses incurred in the operations of Franchisee's Casiola Business or to any creditor of Franchisee for any products, materials, supplies or services purchased by Franchisee's Casiola Business. Franchisor has the right to charge a reasonable fee (the "Management Service Fees") for such management services and may cease to provide management services at any time.
- (2) If Franchisee is a Corporate Entity, upon the death or permanent disability of Franchisee's Managing Owner, the remaining Owners within a reasonable time, which shall not exceed 30 days from the date of death or permanent disability, must appoint a new Managing Owner that is approved by Franchisor.
The appointed Managing Owner must attend and successfully complete the Training Program within 60 days of the appointment.
If Franchisee's Casiola Business is not being managed by a Franchisor approved Managing Owner (as applicable) within 30 days after such death or permanent disability, Franchisor is authorized, but is not required, to immediately appoint a manager to maintain the operations of Franchisee's Casiola Business for, and on behalf of, Franchisee at Franchisee's sole costs until an approved Managing Owner is able to assume the management and operation of Franchisee's Casiola Business.
Franchisor's appointment of a manager for Franchisee's Casiola Business does not relieve Franchisee of its obligations under this Agreement, including this Article 14.D., or constitute a waiver of Franchisor's right to terminate this Agreement pursuant to Article 16, below.
At all times, including while Franchisee's Casiola Business may be managed by Franchisor's appointed manager, Franchisor shall not be liable for any debts, losses, costs, or expenses incurred in the operations of Franchisee's Casiola Business or to any creditor of Franchisee for any products, materials, supplies or services purchased by Franchisee's Casiola Business.
Franchisor has the right to charge a reasonable fee for such management services and may cease to provide management services at any time.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, if the franchisee dies or becomes permanently disabled, Casiola has the option to appoint a manager to oversee the business operations. This is applicable if the franchisee is an individual or a corporate entity where the Managing Owner dies or becomes permanently disabled. The franchisee or their representative has a limited time frame to appoint a qualified manager—30 days from the date of death or disability.
If the franchisee fails to appoint a Franchisor-approved manager within the specified 30-day period, Casiola is authorized to step in and appoint a manager to maintain the business. This intervention is at the franchisee's expense. Casiola retains the right to charge a reasonable fee, referred to as "Management Service Fees," for these management services. Casiola can also discontinue providing these management services at any time.
It is important to note that even if Casiola appoints a manager, the franchisee remains responsible for all obligations under the Franchise Agreement. This includes financial responsibilities and compliance with the agreement's terms. Casiola is not liable for any debts, losses, costs, or expenses incurred during the operation of the Casiola business, even when managed by their appointed manager.
This clause protects Casiola by ensuring business continuity while providing a mechanism to recover costs associated with managing a business due to the franchisee's death or disability. Prospective franchisees should understand the financial implications of this provision and consider business succession planning and insurance to mitigate potential costs.