Can CB Franchising undergo a change in ownership without the consent of the Chocolate Bash franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
tly to the lienholder to pay off such lien. CB Franchising may withhold 25% of the purchase price for 90 days to ensure that all of Franchisee's taxes and other liabilities are paid. CB Franchising may assign this purchase option to another party.
ARTICLE 15. TRANSFERS
- 15.1 By CB Franchising. CB Franchising may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and CB Franchising may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that CB Franchising entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer wit
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising can undergo a change in ownership without needing the franchisee's consent. The franchise agreement allows Chocolate Bash to transfer or assign the agreement, or its rights and obligations, to any person or entity. This includes changes in ownership and/or control of CB Franchising itself.
This provision means a prospective Chocolate Bash franchisee should be aware that the entity they initially contract with could change during the term of the agreement. The franchisee has no approval rights over who owns or controls the Chocolate Bash franchise system. This is a standard clause in many franchise agreements, as it allows the franchisor flexibility in structuring its business and planning for succession or potential sale.
In contrast, the Chocolate Bash franchisee faces restrictions on transferring their franchise. The franchisee must provide at least 60 days' prior notice and obtain Chocolate Bash's consent before any transfer. Chocolate Bash can impose conditions on the transfer, such as a $10,000 transfer fee, ensuring the assignee meets their standards, and requiring the assignee to sign the current franchise agreement. This difference highlights the franchisor's control over the franchise system and the franchisee's limited ability to exit or transfer their business without franchisor approval.