What is a condition for the transfer of a Cilantro Taco Grill franchise related to the premises of the Franchised Business?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.3.7 Franchisor has granted written approval of the material terms and conditions of the Transfer, including, without limitation, that the price and terms of payment will not adversely affect the Franchised Business's operation.
However, Franchisor's approval of a Transfer is not in any way a representation or warranty of the transferee's success or the soundness of transferee's decision to purchase the Franchise on such terms and conditions.
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document for Cilantro Taco Grill states that the franchisor must grant written approval of the material terms and conditions of the transfer, including that the price and terms of payment will not adversely affect the Franchised Business's operation. This means that Cilantro Taco Grill has the right to deny a transfer if they believe the financial arrangements of the sale could negatively impact the restaurant's performance.
This provision protects Cilantro Taco Grill's brand and reputation by ensuring that new owners are financially stable and capable of maintaining the standards of the franchise. It also ensures that the existing franchisee isn't selling at a price that would set the new owner up for failure.
For a prospective franchisee, this means that if they decide to sell their Cilantro Taco Grill franchise, the franchisor has significant control over the sale. The franchisee would need to ensure that the terms of any potential sale are acceptable to Cilantro Taco Grill, not just to themselves and the buyer. This could potentially limit the franchisee's ability to sell to the highest bidder if the franchisor believes the terms are not favorable for the continued operation of the business.