Besides the transfer fee, what other costs are Chocolate Fish Coffee franchisees responsible for during a transfer?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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ARTICLE 15. TRANSFERS
- 15.1 By Chocolate Fish Franchising. Chocolate Fish Franchising may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Chocolate Fish 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 Chocolate Fish 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 without providing Chocolate Fish Franchising at least 60 days prior notice of the proposed Transfer, and without obtaining Chocolate Fish Franchising's consent. In granting any such consent, Chocolate Fish Franchising may impose conditions, including, without limitation, the following:
- (i) Chocolate Fish Franchising receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Chocolate Fish Franchising;
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, a franchisee looking to transfer their franchise must cover several costs beyond the transfer fee. Specifically, Chocolate Fish Coffee requires the franchisee to pay any broker fees and other out-of-pocket costs incurred by Chocolate Fish Franchising during the transfer process. This means that in addition to the $10,000 transfer fee, the franchisee is responsible for any expenses Chocolate Fish Coffee incurs while evaluating and processing the transfer.
Furthermore, the Chocolate Fish Coffee franchisee must ensure all financial obligations to Chocolate Fish Franchising, its affiliates, lessors, vendors, suppliers, and lenders are fully paid. The franchisee must not be in default or breach of the Franchise Agreement or any other obligation to Chocolate Fish Coffee or its affiliates. This condition ensures that the franchise is in good standing financially and legally before the transfer can proceed.
In summary, when transferring a Chocolate Fish Coffee franchise, a franchisee should anticipate covering not only the $10,000 transfer fee but also any broker fees, out-of-pocket costs incurred by Chocolate Fish Coffee, and ensuring all outstanding debts and obligations are settled. This could potentially add significant costs to the transfer process, making it essential for franchisees to plan accordingly.