Must a Craters & Freighters franchisee be in full compliance with the Franchise Agreement for a transfer to be approved?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
e 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.
- 16.3 Conditions for Approval of Transfer. So long as Franchisee and its owner(s) are in full compliance with this Agreement as of the date of the transfer, Franchisor will not reasonably withhold its approval of a transfer that meets all of the following conditions prior to or concurrently with the effective date of the transfer:
- 16.3.1 No Default. Franchisee and Franchisee's owner(s) have performed all obligations and duties under this Agreement.
- 16.3.2 Payments. Franchisee has paid all Royalty Fees, Marketing Fund Contributions, Insurance Payments, Technology Fees, and other amounts owed by Franchisee to Franchisor, any Affiliate of Franchisor, and any third-party creditors relating to the Franchised Business.
- 16.3.3 Governmental Compliance. The transfer is conducted in compliance with applicable laws and regulations.
- 16.3.4 Standards for Franchisees and Franchisee Owners. The transferee and its owner(s) are individual(s) of good moral character, have sufficient business experience, aptitude, and financial resources to operate the Franchised Business, and have otherwise met Franchisor's then-applicable standards for franchisees and franchisee owners.
- 16.3.5 Training. The transferee and/or its management personnel have completed Franchisor's Initial Training Program to Franchisor's satisfaction.
- 16.3.6 Transfer Fee. Franchisee or the transferee has paid Franchisor a transfer fee ("Transfer Fee") in the amount of Fifteen Thousand Dollars and Zero Cents ($15,000.00) to defray expenses Franchisor incurs in connection with the transfer (unless the transfer is to or among then-existing owners of Franchisee).
- 16.3.7 Release. Franchisee and its owner(s) have executed a general release, in a form satisfactory to Franchisor, of
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, a franchisee must be in full compliance with the Franchise Agreement for a transfer to be approved. Specifically, as of the date of the transfer, Craters & Freighters will not withhold approval if the franchisee and its owners are in full compliance with the agreement and the transfer meets certain conditions. These conditions ensure that the transfer process is orderly and protects the Craters & Freighters brand.
These conditions include that the franchisee and its owners have performed all obligations and duties under the agreement, and that all payments, such as Royalty Fees, Marketing Fund Contributions, Insurance Payments, and Technology Fees, have been paid to Craters & Freighters, its affiliates, and any third-party creditors. The transfer must also comply with all applicable laws and regulations. The transferee and their owners must be of good moral character, possess sufficient business experience, aptitude, and financial resources, and meet Craters & Freighters' standards for franchisees and owners.
Furthermore, the transferee or their management personnel must complete Craters & Freighters' Initial Training Program to the franchisor's satisfaction. A transfer fee of $15,000.00 must be paid to Craters & Freighters to cover expenses related to the transfer, unless the transfer is among existing owners. Finally, the franchisee and its owners must execute a general release of any claims against Craters & Freighters and its affiliates. These stipulations are typical in franchising to ensure a smooth transition and maintain brand standards.