What agreement must the Cost Cutters Family Hair Salon franchisee execute when transferring the agreement?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
COST CUTTERS will not unreasonably withhold its consent to any transfer of this Agreement provided that the FRANCHISEE and the transferee Franchisee comply with the following conditions: (A) the FRANCHISEE has complied in all respects with Article 13 of this Agreement; (B) all of the FRANCHISEE'S monetary obligations due to COST CUTTERS have been paid in full, and the FRANCHISEE is not otherwise in default under this Agreement; (C) the FRANCHISEE has executed a written agreement in a form satisfactory to COST CUTTERS in which the FRANCHISEE agrees to observe all applicable obligations and covenants contained in this Agreement; (D) the transferee Franchisee and the holders of its ownership interests agree to be personally liable to discharge all of the FRANCHISEE'S obligations under this Agreement, and will enter into a written agreement in a form satisfactory to COST CUTTERS assuming and agreeing to discharge all of the FRANCHISEE'S obligations and covenants under this Agreement; (E) the transferee Franchisee will have demonstrated to COST CUTTERS' satisfaction that he, she or it meets COST CUTTERS' managerial, financial and business standards for new Franchisees, possesses a good business reputation and credit rating, and possesses the aptitude and ability to conduct the franchised business (as may be evidenced by prior related business experience or otherwise); (F) the transferee Franchisee and all parties having a legal or beneficial interest in the transferee Franchisee including, if applicable, the holders of all ownership interests in the transferee Franchisee and the Personal Guarantors of the transferee Franchisee will execute COST CUTTERS' then-current standard Franchise Agreement for a term ending on the expiration date of this Agreement and such other ancillary agreements as COST CUTTERS may require for the transfer of the FRANCHISEE'S Business; (G) the transferee Franchisee will not be required to pay the Initial Franchise Fee, however, the transferee Franchisee will be required to pay the Continuing Fees and the Advertising Fees to COST CUTTERS at the rate specified in this Agreement; (H) the transferee Franchisee has purchased the Franchised Location or has acquired a lease
Source: Item 23 — RECEIPT (FDD pages 76–439)
What This Means (2024 FDD)
According to the 2024 Cost Cutters Family Hair Salon Franchise Disclosure Document, a franchisee transferring their agreement must execute a written agreement, in a form satisfactory to Cost Cutters Family Hair Salon, to observe all applicable obligations and covenants contained within the original franchise agreement.
Additionally, the transferee franchisee and the holders of its ownership interests must agree to be personally liable for discharging all of the franchisee's obligations under the agreement. They will need to enter into a written agreement, again in a form satisfactory to Cost Cutters Family Hair Salon, assuming and agreeing to fulfill all of the franchisee's obligations and covenants.
Furthermore, if the transferee franchisee does not meet Cost Cutters Family Hair Salon's net worth requirements for operating the business, the franchisee and/or the holders of all ownership interests in the transferee franchisee, along with any personal guarantors, will need to execute a written agreement. This agreement, in a form satisfactory to Cost Cutters Family Hair Salon, ensures they remain liable to Cost Cutters Family Hair Salon for the obligations of the Cost Cutters Family Hair Salon business.