Is a Coffee News franchisee's interest in the Franchise Agreement transferable?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.2 Nontransferability of Franchisee's Interest. Franchisee agrees that its interest in this Agreement is not transferable and shall not be sold, pledged, hypothecated, assigned or transferred without the express written consent of Franchisor, provided that Franchisor's consent shall not be unreasonably withheld.
When a transfer is granted by Franchisor, the transferee franchisee shall execute Coffee News' then current Franchise Agreement and related documents to govern the remaining term of this Agreement.
- 11.3 Ownership Changes.
If Franchisee is a corporation or partnership, Franchisee agrees to notify Franchisor of any change in stock ownership or partnership interest in Franchisee while this Agreement is in effect.
Any such change which, together with all prior changes, results in a change of the person or persons having control of the entity shall be a transfer subject to the provisions of this paragraph 10 and its subparagraphs.
- 11.4 Transfer Upon Death or Permanent Incapacity.
Immediately upon the death or permanent incapacity of the Franchisee or if the Franchisee is a corporation, upon its dissolution or upon the death of any person with a substantial or controlling interest in the Franchise, the Franchisee has the following options:
- a) if requested by the Franchisee's heirs, Franchisor, at its sole discretion, may allow a family member of the Franchisee or another officer of the Franchisee entity continue to temporarily operate the franchise.
Such temporary operation may be converted to a full-term operation, which will be contingent upon Franchisor's approval after said family member has developed sufficient skill necessary to operate the franchised business; or
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, a franchisee's interest in the Franchise Agreement is generally not transferable. The agreement explicitly states that the franchisee cannot sell, pledge, hypothecate, assign, or transfer their interest without the express written consent of Coffee News. However, this consent cannot be unreasonably withheld.
If Coffee News approves a transfer, the new franchisee must sign Coffee News's current Franchise Agreement and related documents. This new agreement will govern the remaining term of the original agreement. This ensures that all franchisees operate under the same current standards and obligations.
If the franchisee is a corporation or partnership, they must notify Coffee News of any changes in stock ownership or partnership interest. Any change that results in a shift of control of the entity is considered a transfer and is subject to the same consent requirements. Upon the death or permanent incapacity of the franchisee, Coffee News may, at its discretion, allow a family member or another officer to temporarily operate the franchise. This temporary operation can become a full-term operation if the family member develops the necessary skills and receives Coffee News's approval.