What is the definition of 'material violation' of Article 15 (transfer) in the Chocolate Bash agreement?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- (vi) Franchisee or any Owner commits a material violation of Section 7.2 (compliance with laws) or Section 13.1 (confidentiality), violates Section 13.2 (non-compete) or Article 15 (transfer), or commits any other violation of this Agreement which by its nature cannot be cured;
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, a 'material violation' of Article 15 (transfer) is grounds for default and termination of the franchise agreement. Specifically, if a Chocolate Bash franchisee commits a material violation of Article 15 (transfer), Chocolate Bash can terminate the agreement.
Article 15 concerns the transfer of ownership or control of the Chocolate Bash franchise. According to the FDD, a 'Transfer' means for the franchisee to voluntarily or involuntarily transfer, sell, or dispose of, in any single or series of transactions, (i) substantially all of the assets of the Business, (ii) this Agreement, (iii) direct or indirect ownership interest of more than 25% of the Business, or (iv) control of the Business.
This means that any significant and unfixable breach of the rules regarding the transfer of the Chocolate Bash franchise, as outlined in Article 15, would be considered a 'material violation'. This could include transferring a large portion of the business assets or ownership without the franchisor's approval, which is a common requirement in franchising to ensure the new owner meets Chocolate Bash's standards and qualifications. Franchisees should carefully review Article 15 to fully understand what constitutes a violation and the potential consequences.