What constitutes a material default that allows Crave to terminate the franchise agreement immediately?
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, a material default leading to immediate termination of the franchise agreement occurs if a franchisee attempts to transfer any interest in the franchise without prior written consent from Crave. This includes selling, assigning, or otherwise encumbering any direct or indirect interest in the franchise, the franchise agreement, or the franchised business's material assets. This restriction applies to the franchisee and any principals involved.
Crave emphasizes that the rights and duties outlined in the franchise agreement are personal to the franchisee and principals. Crave grants these rights based on their assessment of the franchisee's business skills, financial capacity, and personal character. Therefore, any transfer without Crave's approval is considered a significant breach of the agreement.
This provision protects Crave's interests by ensuring that only qualified and approved individuals operate a Crave franchise. It allows Crave to maintain control over who is associated with their brand and system. A prospective franchisee should understand that obtaining prior written consent is essential before considering any transfer of ownership or interest in the franchise to avoid immediate termination of the agreement.