Is Crave's consent required to transfer any direct or indirect interest in the franchise agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
14.2.1 You understand and acknowledge that the rights and duties set forth in this Agreement are personal to you, and that we have granted rights under this Agreement in reliance on the business skill, financial capacity and personal character of you and the Principals. Accordingly, neither you nor any Principal shall sell, assign (including but not limited to by operation of law, such as an assignment under bankruptcy or insolvency laws, in connection with a merger, divorce or otherwise), transfer, convey, give away, pledge, mortgage or otherwise encumber any direct or indirect interest in you, in this Agreement, in the Franchised Business and/or any of the Franchised Business' material assets (other than in connection with replacing, upgrading or otherwise dealing with such assets as required or permitted by this Agreement), without our prior written consent. Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material event of default under this Agreement.
14.2.2 If you wish to transfer all or part of your interest in the Franchised Business, any of the Franchised Business' material assets (except as provided in Section 14.2.1 above) or this Agreement,
or if you or a Principal wishes to transfer or permit a transfer of any ownership interest in you, then in each such case (any or all of which are referred to in this Article 14 as a "Restricted Transfer"), transferor and the proposed transferee shall apply to us for our consent. We shall not unreasonably withhold our consent to a Restricted Transfer. We may, in our sole discretion, require any or all of the following as conditions of our approval:
(a) All of the accrued monetary obligations of you or any of your affiliates and all other outstanding obligations to us arising under this Agreement or any other agreement shall have been satisfied in a timely manner and you shall have satisfied all trade accounts and other debts, of whatever nature or kind, in a timely manner;
(b) You and your affiliates shall not be in default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between you or any of your affiliates and us or any of our affiliates at the time of transaction;
(c) The transferor and its principals (if applicable) shall have executed a general release, in a form reasonably satisfactory to us, of any and all claims against us, our officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees of each of them, in their corporate and individual capacities, including, without limitation, claims arising under this Agreement and federal, state and local laws, rules and regulations;
(d) The transferee shall demonstrate to our reasonable satisfaction that transferee meets the criteria considered by us when reviewing a prospective franchisee's application for a franchise, including, but not limited to, our educational, managerial and business standards; transferee's good moral character, business reputation and credit rating; transferee's aptitude and ability to conduct the business franchised herein (as may be evidenced by prior related business experience or otherwise); transferee's financial resources and capital for operation of the business; and the geographic proximity and number of other Franchised Businesses owned or operated by transferee;
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, franchisees must obtain prior written consent from Crave to sell, assign, transfer, or otherwise encumber any direct or indirect interest in the franchise. This includes interests in the franchise agreement itself, the franchised business, or the business's material assets. This requirement extends to any Principal involved with the franchise. Any transfer without Crave's consent is considered a material breach of the agreement and will be void.
To initiate a transfer, both the current franchisee (transferor) and the proposed new franchisee (transferee) must apply to Crave for consent. Crave states that it will not unreasonably withhold consent to a transfer. However, Crave may require certain conditions to be met before approval.
These conditions include satisfying all outstanding financial and other obligations to Crave and ensuring that neither the franchisee nor its affiliates are in default of any agreements with Crave. Additionally, the transferor must execute a general release of claims against Crave. The proposed transferee must also meet Crave's criteria for new franchisees, including demonstrating adequate educational, managerial, and business standards, good moral character, a solid business reputation, a good credit rating, and sufficient financial resources.
This level of control over franchise transfers is typical in franchising, as it allows Crave to maintain standards and protect its brand by ensuring that new franchisees are qualified and financially stable. Prospective franchisees should carefully review these transfer provisions and understand the requirements for selling their business in the future.