Under what conditions can Costa Vida Fresh Mexican Grill disapprove the terms of a transfer?

According to Costa Vida Fresh Mexican Grill's 2025 Franchise Disclosure Document, the company can disapprove the material terms and conditions of a transfer if they are too burdensome. Specifically, Costa Vida Fresh Mexican Grill can disapprove if the price and terms of payment, including the amount financed by the transferee, are likely to adversely affect the transferee's ability to operate the Costa Vida Restaurants or comply with the franchise agreements. The amount financed by the transferee cannot exceed seventy-five percent (75%) of the purchase price for the assets or stock to be transferred.

This condition protects Costa Vida Fresh Mexican Grill by ensuring that the new franchisee is financially stable and capable of running the business effectively. It also ensures that the terms of the transfer do not create an undue burden that could lead to financial distress or non-compliance with franchise obligations. By setting a limit on the amount that can be financed, Costa Vida Fresh Mexican Grill aims to reduce the risk of the transferee becoming over-leveraged.

For a prospective franchisee, this means that if they plan to sell their franchise, the terms of the sale must be reasonable and not place an excessive financial burden on the buyer. Costa Vida Fresh Mexican Grill has the right to review the terms to ensure the financial viability of the transfer. This also implies that a franchisee looking to transfer should seek a buyer with sufficient financial resources or negotiate terms that do not rely heavily on financing, as an over-leveraged buyer could be rejected by Costa Vida Fresh Mexican Grill.