Does Crave consider the financial capacity of the franchisee when granting rights under the franchise agreement?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchising, LLC" as Franchisor. Nothing contained in this Agreement shall require us to remain in the food service business or to offer the same products and services, whether or not bearing the Marks, in the event that we exercise our right to assign our rights in this Agreement.
14.2 Transfer by You
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.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave does consider the financial capacity of a franchisee. Specifically, the FDD states that Crave grants rights under the Franchise Agreement in reliance on the franchisee's business skill, financial capacity, and personal character. This indicates that Crave assesses these factors when deciding whether to approve a franchise agreement.
Furthermore, if a franchisee wishes to transfer their interest in the Franchised Business, Crave's prior written consent is required. This consent is contingent upon Crave's assessment of the business skill, financial capacity, and personal character of the proposed transferee. This ensures that any new franchisee meets Crave's standards.
For each subsequent Franchise Agreement, the franchisee must submit all financial statements reasonably requested by Crave and satisfy Crave's then-current financial criteria. This requirement ensures that franchisees seeking to expand their operations with additional Crave locations continue to meet the franchisor's financial standards. This ongoing evaluation of financial capacity helps Crave maintain the financial health and stability of its franchise system.