What constitutes a transfer of interest in the Craters & Freighters Franchise Agreement in a divorce proceeding?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
ownership of capital stock or a partnership interest in Franchisee; (2) merger or consolidation or issuance of additional securities representing an ownership interest in Franchisee; (3) any sale of capital stock of Franchisee or any security convertible to capital stock of Franchisee; (4) transfer of an interest in Franchisee, this Agreement, or the Franchised Business in a divorce, insolvency, corporate, or partnership dissolution proceeding, or otherwise by operation of law; or (5) transfer of an interest in Franchisee, this Agreement, or the Franchised Business in the event of the death of Franchisee or an owner of Franchisee by will, declaration of or transfer in trust, or under the laws of interstate succession.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, a transfer of interest includes the transfer of an interest in the Franchisee, the Franchise Agreement, or the Franchised Business in a divorce proceeding. This means that if a franchisee divorces, any transfer of ownership or rights related to the Craters & Freighters franchise as part of the divorce settlement is considered a transfer of interest under the agreement.
This provision is important for prospective franchisees to understand because divorce is a common life event. If a franchisee's ownership in the Craters & Freighters business is subject to division in a divorce, it triggers the transfer provisions of the franchise agreement. This typically means that Craters & Freighters has the right to approve the new owner (the ex-spouse or another party) or even repurchase the franchise interest.
It is crucial for potential Craters & Freighters franchisees to discuss these implications with legal and financial advisors before signing the Franchise Agreement. Understanding how a divorce could impact the ownership and operation of the franchise is essential for protecting their investment and ensuring compliance with the terms of the agreement.