What is required of a Cinch I.T. franchisee to obtain consent for transferring the Franchise Agreement?

NS CONTAINED IN A FRANCHISE AGREEMENT BETWEEN | | | | | | | | | CINCH FRANCHISE, LLC AND DATED | | | | | | | | | , 20" | | | | | | | |

A stop transfer order shall be in effect against the transfer of any securities on Your records except transfers permitted by this Agreement.

(c) You acknowledge and agree that the restrictions on transfer imposed herein are reasonable and are necessary to protect Our franchise system; CINCH I.T. trade secrets and operating procedures; CINCH I.T.'s general high reputation and image; the Licensed Rights; as well as You and other CINCH I.T. franchisees. Any assignment or transfer permitted by this Agreement shall not be effective until We receive a completely executed copy of all transfer documents and consent

to such transfer in writing. Under no circumstances will You have a right to transfer under this Agreement before the Franchised Business has commenced operations.

• (d) Your performance is of vital importance to the market position and Our overall image, and there are many subjective factors that comprise the process by which We select a suitable franchisee. Our consent to a transfer or assignment by You of the Franchise and Franchised Business shall, in addition to the other restrictions and requirements herein noted, remain a subjective determination and shall consider, but not be limited to, whether:
  • (i) All obligations of Yours under this Agreement and all other franchise documents, and the relationship created under those agreements are being assumed by the transferee;
  • (ii) All ascertained debts of Yours to Us and Our affiliates have been paid;
  • (iii) You, at the time of the request to transfer and as of the date of transfer, are not in default under this Agreement or any other franchise agreement;
  • (iv) Except for other CINCH I.T. franchisees, the proposed transferee does not operate or participate in an entity that operates a franchise, license, or other business offering products and/or services similar to those offered by the Franchised Business;
  • (v) The proposed transferee meets all of Our requirements for new franchisees, including, but not limited to, good reputation and character, experience, business acumen, operational ability, financial strength and stability, willingness and ability to devote the required time and best efforts to the operation of the Franchised Business and other business considerations as We may reasonably apply in evaluating new franchisees. You must provide Us all information We require concerning the proposed transaction (including a copy of the purchase agreement and all related documents), and about the proposed transferee;
  • (vi) We shall have the right to approve the material terms and conditions of the transfer, including, without limitation, the right to confirm that the price and terms of payment are not so burdensome as to affect adversely the transferee's operation of the Franchised Business.
  • (vii) The proposed transferee executes or, in appropriate circumstances, causes all necessary parties to execute Our then-current standard form of franchise agreement (provided that such execution will not serve to extend the then remaining term of the franchise) and such other then-current ancillary agreements being required by Us of new franchisees on the date of transfer;
  • (viii) You, except to the extent prohibited by state law, have executed a general release of any and all claims against Us and Our subsidiaries and affiliates, and Our respective officers, managers, directors, agents and employees;

• (ix) You or proposed transferee have paid to Us a non-refundable Transfer Fee of Ten Thousand Dollars ($10,000.00) to cover Our reasonable costs in effecting the transfer and other initial assistance to transferee;
• (x) The proposed transferee has paid to Us Our then-current non-refundable Initial Training Fee to attend the new franchisee Initial Training Program;
• (xi) If You are providing financing to the proposed transferee for any part of the purchase price, You have agreed that all of the proposed transferee's obligations under promissory notes, agreements or security interests reserved in the Franchised Business are subordinate to the proposed transferee's obligation to pay fees and other amounts due to Us and otherwise to comply with the Franchise Agreement; and,
• (xii) You will abide by all post-termination covenants including, without limitation, the covenant not to compete set forth in Section 25, subject to applicable state law, and confidentiality set forth in Section 26.
• (e) If You pursue but do not complete a transfer which has caused Us to incur costs and expenses in reviewing and documenting the proposed transfer, You must reimburse Us for these costs and expenses.
• (f) This Agreement shall inure to Our benefit, and Our successors and assigns, and We shall have the right to transfer or assign without Your consent all or any part of Our interest in this Agreement to any person or legal entity who in Our good faith judgment has the willingness and capacity to assume Our obligations.

Source: Item 23 — RECEIPTS (FDD pages 60–269)