Can Chocolate Fish Coffee impose conditions on a franchisee's transfer of the franchise?

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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;
  • (ii) the proposed assignee and its owners have completed Chocolate Fish Franchising's franchise application processes, meet Chocolate Fish Franchising's then-applicable standards for new franchisees, and have been approved by Chocolate Fish Franchising as franchisees;
  • (iii) the proposed assignee is not a Competitor;
  • (iv) the proposed assignee executes Chocolate Fish Franchising's then-current form of franchise agreement and any related documents, which form may contain materially different provisions than this Agreement (provided, however, that the proposed assignee will not be required to pay an initial franchise fee);

• (v) all owners of the proposed assignee provide a guaranty in accordance with Section 2.5;
• (vi) Franchisee has paid all monetary obligations to Chocolate Fish Franchising and its affiliates, and to any lessor, vendor, supplier, or lender to the Business, and Franchisee is not otherwise in default or breach of this Agreement or of any other obligation owed to Chocolate Fish Franchising or its affiliates;
• (vii) the proposed assignee and its owners and employees undergo such training as Chocolate Fish Franchising may require;
• (viii) Franchisee, its Owners, and the transferee and its owners execute a general release of Chocolate Fish Franchising in a form satisfactory to Chocolate Fish Franchising; and
• (ix) the Business fully complies with all of Chocolate Fish Franchising's most recent System Standards.
• 15.3 Transfer for Convenience of Ownership. If Franchisee is an individual, Franchisee may Transfer this Agreement to a corporation or limited liability company formed for the convenience of ownership after at least 15 days' notice to Chocolate Fish Franchising, if, prior to the Transfer: (1) the transferee provides the information required by Section 2.3; (2) Franchisee provides copies of the entity's charter documents, by-laws (or operating agreement) and similar documents, if requested by Chocolate Fish Franchising, (3) Franchisee owns all voting securities of the corporation or limited liability company, and (4) Franchisee provides a guaranty in accordance with Section 2.5.
• 15.4 Transfer upon Death or Incapacity. Upon the death or incapacity of Franchisee (or, if Franchisee is an entity, the Owner with the largest ownership interest in Franchisee), the executor, administrator, or personal representative of that person must Transfer the Business to a third party approved by Chocolate Fish Franchising (or to another person who was an Owner at the time of death or incapacity of the largest Owner) within nine months after death or incapacity. Such transfer must comply with Section 15.2.
• 15.5 Chocolate Fish Franchising's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3, to a co-Owner, or to a spouse, sibling, or child of an Owner), Chocolate Fish Franchising will have a right of first refusal, as set forth in this Section. Franchisee (or its Owners) shall provide to Chocolate Fish Franchising a copy of the terms and conditions of any Transfer. For a period of 30 days from the date of Chocolate Fish Franchising's receipt of such copy, Chocolate Fish Franchising will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions (except that Chocolate Fish Franchising may substitute cash for any other form of payment). If Chocolate Fish Franchising does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
• 15.6 No Sublicense. Franchisee has no right to sublicense the Marks or any of Franchisee's rights under this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 41–119)