Must all debts owed by the Crave franchisee to Crave or its affiliates be paid before a transfer can be approved?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
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;
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, a franchisee must satisfy all accrued monetary obligations to Crave and its affiliates before a transfer of interest in the franchised business can be approved. This includes ensuring that all outstanding obligations arising under the Franchise Agreement or any other agreement with Crave or its affiliates are fulfilled in a timely manner. Additionally, the franchisee must settle all trade accounts and other debts, regardless of their nature, promptly.
This requirement ensures that Crave maintains financial stability and receives all payments owed before a new franchisee takes over. It protects Crave from potential financial losses that could arise from unpaid debts or outstanding obligations.
For a prospective Crave franchisee, this means that if they decide to sell their franchise, they must first clear all financial obligations to Crave. Failure to do so could result in the franchisor withholding approval of the transfer, potentially delaying or preventing the sale of the franchise. This condition underscores the importance of maintaining good financial standing with Crave throughout the duration of the franchise agreement.