When a Crave franchisee or principal desires to transfer their interest, is it a prohibited action to transfer to a competitor of Crave?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
a transfer of any interest described herein shall not constitute a waiver of any claims which we may have against the transferring party, nor shall it be deemed a waiver of our right to demand material and full compliance with any of the terms of this Agreement by the transferee.
14.7 Transfer Between Owners
If you or any Principal desires to transfer their interest, whether to another Principal or to a new Principal, then you shall promptly submit to us a request for our approval of such proposed transfer in writing and shall provide such information relative thereto as we may reasonably request prior to such transfer, together with payment of Five Thousand Dollars ($5,000). Such transferee may not be a competitor of ours. Such transferee will be your Principal and as such agrees to be individually bound by certain obligations in this Agreement, including covenants concerning confidentiality and non-competition and agrees to personally guarantee your performance under this Agreement. Notwithstanding the provisions contained in Section 14.2 to the contrary, the Principals may freely transfer their ownership interests in you among themselves and, provided management control does not change, to their family members (or to trusts for
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if a franchisee or principal desires to transfer their interest, transferring to a competitor is not allowed. Specifically, if a franchisee or principal wants to transfer their interest to another principal or a new principal, they must seek Crave's approval in writing before the transfer.
As part of this request, the franchisee must provide all information Crave reasonably requests and pay a fee of $5,000. The FDD explicitly states that the proposed transferee "may not be a competitor" of Crave. If the transferee is approved, they become a Principal and must agree to be bound by the confidentiality and non-competition obligations outlined in the franchise agreement, including personally guaranteeing the franchisee's performance.
However, the FDD also notes an exception: Principals can freely transfer their ownership interests among themselves, or to their family members (or trusts for their benefit), without the right of first refusal applying, as long as management control doesn't change. Crave requires 30 days' prior written notice of such transfers, including the names and percentages transferred, and an updated Attachment 3.