What must Chop5 Salad Kitchen area developers and owners sign as a condition of transfer approval?
Chop5_Salad_Kitchen Franchise · 2024 FDDAnswer from 2024 FDD Document
liance upon the character, skill, attitude, business ability and financial resources of you and your Owners. Because this Agreement is a personal services contract, neither you nor any Owner may engage in a Transfer (other than a Permitted Transfer) without our prior written approval. Any Transfer (other than a Permitted Transfer) without our approval is void and constitutes a breach of this Agreement. We will not unreasonably withhold approval if all of the following conditions are satisfied:
- (i) we believe the proposed transferee has sufficient business experience, aptitude and financial resources to own and operate a Restaurant and meets our minimum criteria for franchisees;
- (ii) you and your affiliates and Owners are in full compliance with all Definitive Agreements;
- (iii) the transferee's owners successfully complete, or make arrangements to attend, the initial training program and the transferee pays us any applicable training fee;
- (iv) your landlord consents to the assignment of your lease to the transferee, or the transferee is diligently pursuing an approved substitute location within the Site Selection Area;
- (v) the transferee and its owners obtain all licenses and permits required by applicable Law to own and operate the Restaurant;
- (vi) the transferee: (a) agrees to discharge and guarantee all of your obligations under this Agreement and any other agreement relating to the Business (such as supplier contracts);
Source: Item 23 — RECEIPT (FDD pages 50–178)
What This Means (2024 FDD)
According to Chop5 Salad Kitchen's 2024 Franchise Disclosure Document, both the transferee and their owners must sign Chop5 Salad Kitchen's current form of area development agreement or franchise agreement as a condition for transfer approval. This requirement applies unless Chop5 Salad Kitchen instructs the original franchisee to assign the existing agreement to the transferee.
For area development agreements, the new agreement's term will match the remaining term of the original agreement, and the transferee won't have to pay a separate development fee. The development schedule and territory will remain the same as in the original agreement, adjusted to reflect any development obligations already fulfilled before the transfer.
For franchise agreements, the term and renewal terms will align with what remains of the original agreement, and the transferee is not required to pay a separate initial franchise fee. Additionally, the transferee must agree to discharge and guarantee all of the original franchisee's obligations under the agreement and any other agreements related to the business, such as supplier contracts, and must sign any agreement Chop5 Salad Kitchen requires to confirm this.