Does the Crave franchise agreement allow for assignment by operation of law, such as in connection with a merger, without prior written consent?
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, franchisees are restricted from assigning their interest in the franchise agreement by operation of law without prior written consent from Crave. The franchise agreement explicitly states that any assignment or transfer, whether by operation of law or otherwise, without Crave's consent is considered void and constitutes a material breach of the agreement. This includes assignments related to bankruptcy, insolvency, merger, or divorce.
This provision underscores Crave's control over who becomes a franchisee and ensures that any transfer aligns with their standards for business skill, financial capacity, and personal character. It protects Crave's interests by preventing unwanted or unqualified individuals from taking over a franchise location through legal mechanisms without their approval.
For a prospective franchisee, this means that they cannot transfer their franchise through means like a merger or divorce without first obtaining Crave's written consent. Failure to do so could result in a default under the franchise agreement, potentially leading to termination of the franchise. This is a fairly standard clause in franchise agreements, as franchisors typically want to maintain control over who operates their branded locations.