Does Craters & Freighters have any restrictions on its right to assign the Franchise Agreement, as stated in Section 16.1?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item | Section in Franchise Provision Agreement | Summary | |
|---|---|---|---|
| transfer of the Franchise Agreement; or insolvency or bankruptcy. | |||
| i. | Franchisee's obligations on termination/non-renewal | Sections 15.3, 20.1, and 20.2 | Pay all amounts due, discontinue use of Marks, discontinue use of Confidential Information and Trade Secrets, discontinue use of telephone numbers associated with the Franchised Business, and comply with post-term non competition and non-solicitation covenants. Upon the termination or expiration of the Franchise Agreement, we will have the option, but not the obligation, to purchase any and all of the assets used by you to operate the Franchised Business at a purchase price equal to net depreciated book value. |
| j. | Assignment of contract by franchisor | Section 16.1 | No restriction on our right to assign. |
| k. | "Transfer" by franchisee – defined | Section 16.2 | Includes transfer of contract or assets or ownership changes. |
| l. | Franchisor's approval of transfer by franchisee | Section 16.3 | We have the right to approve all rights to transfer but will not unreasonably withhold approval as long as all of the conditions for such transfer are met. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, there are no restrictions on the company's right to assign the Franchise Agreement. Item j in the table provided states that Section 16.1 of the Franchise Agreement indicates this lack of restriction.
This means that Craters & Freighters, as the franchisor, can freely transfer or assign its rights and obligations under the Franchise Agreement to another party without needing the franchisee's consent or meeting specific conditions. This is a standard practice in franchising, as it allows the franchisor flexibility in its business operations, such as in the event of a merger, acquisition, or corporate restructuring.
For a prospective franchisee, this signifies that the entity they initially contracted with may change over the term of the agreement. While the terms of the Franchise Agreement should remain the same, the new franchisor may have a different management style or business priorities. It is important for franchisees to understand this possibility and to ensure they are comfortable with the potential for such a change during the franchise term.