What constitutes a material breach of the Crave Development Agreement regarding assignment or transfer of interest?
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.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the Development Rights granted to a franchisee are personal and cannot be sold, assigned, transferred, or encumbered, either in whole or in part, except as explicitly stated in Section 11 of the agreement.
Specifically, any attempt to sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct or indirect interest in the franchisee, the Development Agreement, the Franchised Business, or any of the Franchised Business's material assets without Crave's prior written consent is considered a material breach. This prohibition includes transfers by operation of law, such as those occurring under bankruptcy or insolvency laws, or in connection with a merger or divorce.
The FDD emphasizes that Crave grants rights under the Development Agreement based on the business skill, financial capacity, and personal character of the franchisee and its principals. Therefore, any unauthorized transfer is deemed a significant violation of the agreement, potentially leading to termination of the Development Agreement.