What must Craters & Freighters consider when transferring the Franchise Agreement?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
18. DEATH OR DISABILITY OF FRANCHISEE.
Upon death or permanent disability of Franchisee or a principal owner of Franchisee, the executor, administrator, conservator, guardian, or other personal representative of such person must transfer its interest in this Agreement or such interest in Franchisee to a third party approved by Franchisor. Such disposition of this Agreement or such interest (including, without limitation, transfer by bequest or inheritance) (collectively, "Disposition") must be completed within a reasonable time, not to exceed six (6) months from the date of death or permanent disability ("Disposition Deadline"), and will be subject to all of the terms and conditions applicable to transfers contained in Section 16 of this Agreement including, but not limited to Franchisor's right of first refusal; provided, however, in the event the Disposition has not been completed before the Disposition Deadline because the estate of Franchisee (or a principal owner of Franchisee, as the case may be) has not yet been concluded in probate court, then the Disposition Deadline will be extended until such time that such probate court has completed the probate process, not to exceed a total of twelve (12) months from the date of death or permanent disability. For purposes hereof, the term "permanent disability" will mean a mental or physical disability, impairment, or condition that is reasonably expected to prevent or actually does prevent Franchisee or an owner of a controlling interest in Franchisee from supervising the management and operation of the Franchised Business for a period of six (6) months or more from the onset of such disability, impairment, or condition.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the death or permanent disability of a franchisee or a principal owner necessitates the transfer of their interest in the Franchise Agreement to a third party approved by Craters & Freighters. This transfer, referred to as a "Disposition," must occur within six months from the date of death or permanent disability. However, if the franchisee's estate is still in probate court, the deadline extends to a maximum of twelve months from the date of death or disability.
Craters & Freighters retains the right of first refusal during this transfer process, as outlined in Section 16 of the agreement. The term "permanent disability" is defined as a mental or physical condition that prevents the franchisee or a controlling owner from managing the franchised business for at least six months.
This clause ensures business continuity while allowing Craters & Freighters to maintain control over who operates a franchise within their system. The timeframes provided offer some flexibility for the franchisee's estate while also setting a limit to ensure the business is transferred in a timely manner. A prospective franchisee should carefully consider these stipulations and discuss any concerns with Craters & Freighters before entering into an agreement.