What happens to Cd One Price Cleaners' obligations under the Franchise Agreement after an assignment?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.3.1 All of Franchisee's (and its owners') accrued monetary obligations and all other outstanding obligations to Franchisor, its affiliates, vendors, and Franchisee's landlord, suppliers and other creditors and taxes, shall have been satisfied;
- 12.3.2 Franchisee (and each of its owners) is not in default with respect to any provision of this Agreement or any other agreement between Franchisee and Franchisor or any of Franchisor's affiliates;
- 12.3.3 Franchisee and the transferor shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims which it may have against Franchisor, its affiliates and their respective owners, officers, employees and agents, including, without limitation, claims arising under federal, state and local laws and regulations;
- 12.3.4 At Franchisor's option, the transferee (and, if the transferee is a business entity, all owners of a beneficial interest in the transferee) shall either (i) enter into a written assignment, in a form satisfactory to Franchisor (including the execution of personal guarantees), assuming and agreeing to fulfill all of Franchisee's obligations under this Agreement and all related agreements, or (ii) execute, for a term ending on the expiration of the Term, the form of franchise agreement and any ancillary documents then being offered to new CD Store franchisees (including the execution of personal guarantees); provided, however, that except as provided below, the transferee shall not be required to pay any initial franchise fee;
- 12.3.5 The transferee (and, if the transferee is a business entity, all owners of a beneficial interest in the transferee) shall demonstrate to Franchisor's satisfaction that it (and they) meet Franchisor's educational, managerial and business standards and do not operate or have any direct or indirect interest in any Competitive Business; possess a good moral character (if an individual or if an entity this shall apply to the principal(s) thereof), business reputation, and credit rating; have the aptitude, ability, and requisite financial resources and capital to operate the Store, as may be evidenced by prior related
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Cd One Price Cleaners does not explicitly state what happens to Cd One Price Cleaners' obligations under the Franchise Agreement after an assignment. However, it does outline the conditions under which a franchisee can transfer their franchise agreement.
Specifically, the FDD details certain obligations the franchisee must meet before an assignment can occur. These include satisfying all monetary and outstanding obligations to Cd One Price Cleaners, its affiliates, vendors, the franchisee's landlord, suppliers, and other creditors, as well as remaining in compliance with all agreements. Additionally, the franchisee and transferor must execute a general release of any claims against Cd One Price Cleaners.
Furthermore, the transferee must meet Cd One Price Cleaners' standards for education, management, and business acumen, and must not have any conflicting interests in a competitive business. The transferee must also demonstrate good moral character, business reputation, credit rating, aptitude, ability, and the necessary financial resources to operate the store.
To fully understand Cd One Price Cleaners' obligations after an assignment, a prospective franchisee should seek clarification from the franchisor regarding the specific terms and conditions that apply to both the outgoing franchisee, the incoming franchisee, and Cd One Price Cleaners itself.