What transfer fee does CB Franchising receive from a Chocolate Bash Franchisee upon transfer?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
ce on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing CB Franchising at least 60 days prior notice of the proposed Transfer, and without obtaining CB Franchising's consent. In granting any such consent, CB Franchising may impose conditions, including, without limitation, the following:
- (i) CB Franchising receives a transfer fee equal to $10,000;
- (ii) the proposed assignee and its owners have completed CB Franchising's franchise application processes, meet CB Franchising's then-applicable standards for new franchisees, and have been approved by CB Franchising as franchisees;
- (iii) the proposed assignee is not a Competitor;
- (iv) the proposed assignee executes CB Franchising's then-current form of franchise agreement and any related documents, which form may contain materially different provisions than this Agreement;
- (v) all owners of the proposed assignee provide a guaranty in accordance with Section 2.5;
- (vi) Franchisee has paid all monetary obligations to CB Franchising and its affiliates, and t
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising requires a $10,000 transfer fee if a franchisee transfers their franchise to a new owner. This fee is one of several conditions that Chocolate Bash may impose when a franchisee seeks to transfer their franchise rights.
In addition to the transfer fee, Chocolate Bash stipulates other conditions that must be met before a transfer is approved. The proposed new franchisee must complete Chocolate Bash's application process, meet the then-current standards for new franchisees, and be approved by Chocolate Bash. The new franchisee cannot be a competitor. They must also execute Chocolate Bash's current franchise agreement, which may have different terms than the original agreement. All owners of the new franchisee must provide a guaranty, and the transferring franchisee must have paid all outstanding obligations to Chocolate Bash and its affiliates, as well as to any lessors, vendors, suppliers, or lenders. Finally, the new franchisee and their employees must undergo any required training.
These conditions and the transfer fee ensure that Chocolate Bash maintains control over who operates its franchises and that the brand's standards are upheld. For a prospective franchisee, it's important to understand these requirements, as they can significantly impact the ability to sell the franchise in the future. The $10,000 transfer fee, while not uncommon in the franchise industry, should be factored into any financial projections related to the potential sale of the business.