Does the Craters & Freighters franchisee's owner(s) need to meet certain obligations 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 FDD, both the franchisee and their owner(s) must meet specific conditions for a transfer to be approved. Craters & Freighters will not unreasonably withhold approval of a transfer if the franchisee and their owner(s) are in full compliance with the Franchise Agreement as of the transfer date and the outlined conditions are met.
These conditions include the franchisee and owner(s) having performed all obligations and duties under the agreement, and having paid all outstanding Royalty Fees, Marketing Fund Contributions, Insurance Payments, Technology Fees, and any other amounts owed to Craters & Freighters, its affiliates, or third-party creditors related to the franchised business. The transfer must also comply with all applicable laws and regulations. The transferee and their owners must meet Craters & Freighters' standards for franchisees, including demonstrating good moral character, sufficient business experience, aptitude, and financial resources.
Furthermore, the transferee or their management personnel must complete Craters & Freighters' Initial Training Program to the company's satisfaction. A transfer fee of $15,000 must be paid to Craters & Freighters to cover expenses associated with the transfer, unless the transfer is among existing owners of the franchisee. Finally, the franchisee and their owner(s) must execute a general release of any claims against Craters & Freighters, its subsidiaries, affiliates, and their respective stakeholders, in a form that is satisfactory to Craters & Freighters.
These stipulations are typical in franchising, as franchisors like Craters & Freighters need to ensure that any new franchisee meets their standards and that all financial obligations are settled before a transfer is finalized. This protects the integrity of the brand and the interests of other franchisees within the Craters & Freighters system.