Must a Crave franchisee satisfy all other debts before transferring their interest in the Franchised Business?
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 other debts before transferring their interest in the franchised business. Specifically, the franchisee needs to have satisfied all trade accounts and other debts in a timely manner. This requirement is one of the conditions that Crave may, in its sole discretion, require for approval of the transfer.
This means that if a Crave franchisee wants to sell their franchise, they must first ensure that all outstanding payments to Crave, as well as any other business-related debts, are paid off. This includes not only debts directly to Crave but also debts to suppliers, landlords, and other creditors. The franchisor's approval is needed for the transfer, and Crave can withhold consent if these financial obligations are not met.
This condition protects Crave by ensuring that the franchise is not transferred with outstanding debts that could negatively impact the brand or the new franchisee. It also aligns with standard franchising practices, where franchisors typically require franchisees to be in good financial standing before allowing a transfer. A prospective Crave franchisee should be aware of this requirement and plan accordingly if they anticipate selling their franchise in the future, ensuring all debts are managed and paid in a timely manner.