Does the Closet Storage Concepts Transfer Agreement specify any financial obligations for the Transferee?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
r either as licensor, franchisor, independent operator or licensee of any other business, chain or network which is similar in nature or in competition with Franchisor or Closet & Storage Concepts System franchisees, except that the transferee may be an existing franchisee of Franchisor;
- 7.3.2.6 The transferee has executed Franchisor's then-current Franchise Agreement, at Franchisor's option;
- 7.3.2.7 Franchisee or transferee has paid Franchisor a transfer fee equal to 50% of the then current Initial Franchise Fee, subject to a minimum of $24,750;
- 7.3.2.8 The transferee and its manager shall complete Franchisor's training program to Franchisor's satisfaction at the transferee's own expense within the time frame set forth by Franchisor; and
- 7.3.2.9 Franchisee acknowledges and agrees that the post-termination provisions of this Agreement including, without limitation, the noncompetition provisions, shall survive the transfer of the Franchise and Franchisor, Franchisee and the transferee enter into a transfer agreement in the form approved by Franchisor. A copy of Franchisor's current form is attached as Exhibit 9 hereto.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the transferee (the party buying the franchise) has several financial obligations. The transferee must pay a transfer fee to Closet Storage Concepts equal to 50% of the then-current Initial Franchise Fee, but this fee is subject to a minimum of $24,750.
Additionally, the transferee is responsible for covering their own expenses related to completing Closet Storage Concepts' training program. This means the transferee will need to budget for travel, accommodation, and any other costs associated with attending the training.
Furthermore, the document states that the transferee must demonstrate they possess adequate financial resources and capital to meet the performance obligations outlined in the Franchise Agreement. This implies the transferee needs to prove they have sufficient funds to operate the Closet Storage Concepts business successfully, although the exact amount is not specified in this section. It is common practice in franchising for the franchisor to ensure the financial stability of the incoming franchisee to maintain brand standards and reduce the risk of business failure.