For Cordova's approval of a transfer, must the franchisee and their Owners not be in default of their obligations?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
| i. | Franchisee's obligations on termination/non-renewal | 6, 17 | You must: pay all sums that you owe to us under the Franchise Agreement and all other agreements with us; cease owning and operating the Franchised Business; cease representing yourself as a franchisee of ours; permanently cease using and/or accessing the System, the Licensed Marks, our confidential information, the Manuals, the Business Management System, the Business Management System Data, and the System Supplies; return the Manuals and all confidential information to us in the original form provided to you and document the destruction of all electronic files related to same; completely de-identify the location and/or facility associated with the Franchised Business; as requested by us, transfer to us all data, telephone listings, digital media, accounts, web listings and websites associated with the Franchised Business; and abide by the post-termination non competition covenants and restrictions. |
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| j. | Assignment of the contract by franchisor | 14.A. | No restriction on our right to assign. |
| k. | "Transfer" by franchisee definition | 14.B. | A transfer means and includes, whether voluntary or involuntary, conditional or unconditional, direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; and (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee. |
| l. | Franchisor's approval of transfer by franchisee | 14.B. | Transfers require our prior written consent, which may be granted or withheld in our discretion. |
| m. | Conditions for franchisor's approval of transfer | 14.C. | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners and their spouses must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferee's continued use and occupancy of such location throughout the term of the Franchise Agreement; the assets of the Franchised Business must be transferred to the transferee; the transferee and the transferee's owners and managers, at the transferee's expense, must complete our training programs; we |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–37)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, a franchisee and their owners must not be in default of their obligations for Cordova to approve a transfer. Specifically, the franchisee must provide Cordova with 30 days prior written notice of the proposed transfer. Both the franchisee and their owners must be in compliance with their obligations under the Franchise Agreement and all other agreements with Cordova.
This requirement is standard practice in franchising, as franchisors want to ensure that the business is being transferred in good standing. A franchisee in default might be in violation of the franchise agreement, such as failure to pay royalties or adhere to brand standards. Transferring a business in default could negatively impact the brand's reputation and create legal complications for Cordova.
In addition to not being in default, the transferee must agree to be bound by all the terms and provisions of the Franchise Agreement. The transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement. The franchisee and their Owners and their spouses must sign a general release in favor of Cordova. The transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferee's continued use and occupancy of such location throughout the term of the Franchise Agreement. The assets of the Franchised Business must be transferred to the transferee. The transferee and the transferee's owners and managers, at the transferee's expense, must complete Cordova's training programs.
Prospective Cordova franchisees should carefully review the franchise agreement to understand what constitutes a default and ensure they remain in compliance with all obligations. This will help facilitate a smooth transfer process if they decide to sell their franchise in the future.