What constitutes a material breach of the Craters & Freighters Franchise Agreement regarding transfer?
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 ment
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
Based on the 2025 Craters & Freighters Franchise Disclosure Document, a material breach related to transfer occurs upon the death or permanent disability of the franchisee or a principal owner if the interest in the Franchise Agreement is not transferred to a Franchisor-approved third party within a specified timeframe. The executor, administrator, conservator, guardian, or other personal representative must complete the disposition within six months from the date of death or permanent disability. This disposition is subject to all terms and conditions applicable to transfers outlined in Section 16 of the Agreement, including Craters & Freighters' right of first refusal.
However, there is an exception: if the estate of the franchisee (or principal owner) is still in probate court by the initial six-month deadline, the deadline is extended until the probate process is complete, but this extension cannot exceed a total of twelve months from the date of death or permanent disability. Failure to meet these conditions constitutes a material breach of the Franchise Agreement.
This clause ensures that Craters & Freighters maintains control over who operates the franchise, even in unforeseen circumstances like death or disability. It protects the brand by ensuring that any new franchisee meets their standards and is properly vetted. For a prospective franchisee, this means understanding the importance of succession planning and having a clear plan for transferring the franchise in case of death or disability to avoid breaching the agreement.