What is the dependency between the transfer of the Crave franchise and the franchisor's approval?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
ovided that, with respect to any assignment resulting in the subsequent performance by the assignee of our functions: (i) the assignee shall, at the time of such assignment, be financially responsible and economically capable of performing our obligations; and (ii) the assignee shall expressly assume and agree to perform such obligations.
You expressly affirm and agree that we may sell our assets, our rights to the Marks or to the System outright to a third party; may go public; may engage in a private placement of some or all of our securities; may merge, acquire other corporations, or be acquired by another corporation; may undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring; and, with regard to any or all of the above sales, assignments and dispositions, you expressly and specifically waive any claims, demands or damages arising from or related to the loss of said Marks (or any variation thereof) and/or the loss of association with or identification of "CRAVE 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.
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;
- (e) The transferee shall enter into a written agreement, in a form reasonably satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants and agreements contained in this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the transfer of a franchise is contingent upon receiving prior written consent from Crave. Crave emphasizes that the rights and duties outlined in the franchise agreement are specific to the franchisee, and the company has granted these rights based on the franchisee's business skills, financial capacity, and personal character. Therefore, any attempt to sell, assign, transfer, or encumber any interest in the franchise, the agreement, or the business's assets without Crave's prior written consent will be considered void and a material breach of the agreement.
To gain approval for a transfer, several conditions must be met. The proposed transferee must be willing and financially able to assume Crave's obligations under the Franchise Agreement. The transferee is required to enter into a written agreement, satisfactory to Crave, accepting full liability for all obligations within the agreement from the date of transfer. If the transferee is a corporation or partnership, its shareholders or partners must also guarantee the performance of these obligations. The transferee must also execute the then-current standard form franchise agreement for the remainder of the term, which may have different terms, including royalty and brand development fees, although no initial franchise fee is required.
Additionally, the transferee is responsible for renovating and upgrading the Franchised Business to meet Crave's current standards, within a timeframe specified by Crave. The transferor remains liable for all obligations incurred before the transfer date and must execute any documents requested by Crave to evidence this liability. The transferee, along with their General Manager and other personnel, must complete any required training programs. Finally, a transfer fee of $5,000 is due to Crave to cover the costs of reviewing the transfer application, including training, legal, and accounting fees.
These stipulations ensure that any new franchisee meets Crave's standards and is fully prepared to operate the business successfully, protecting the brand and the interests of other franchisees. The $5,000 transfer fee is a fairly standard cost in the franchise industry, intended to offset the franchisor's expenses in vetting and training a new franchisee.