What happens to the rights granted under the Crave Multi-Unit Development Agreement upon the death or disability of the multi-unit developer?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| h. “Cause” defined – non- curable defaults | 9 | Failure to meet your minimum performance schedule; failure to comply with applicable laws; if all of your Franchised Businesses stop operating; unauthorized transfer; you make a material misrepresentation to us; conviction by you or your owners of an indictable offense; bankruptcy or insolvency; if a Franchise Agreement with us is terminated according to its terms (this is a cross-default provision) | |
| i. Multi-unit developer’s | 10 | You must stop selecting sites for Franchised | |
| obligations on termination/ | Businesses, and you may not open any more | ||
| non-renewal | Franchised Businesses | ||
| j. Assignment of contract by franchisor | 11 | No restriction on our right to assign. However, no assignment will be made except to an assignee who, in our good faith judgment, is willing and able to assume our obligations under the Multi-Unit Development Agreement. | |
| k. “Transfer” by multi-unit | 11 | Includes transfer of any interest in the Multi- | |
| developer – defined | Unit Development Agreement | ||
| l. Franchisor approval of transfer by multi-unit developer | 11 | We have the right to approve all transfers, our consent not to be unreasonably withheld | |
| m. Conditions for franchisor approval of transfer | 11 | Conditions for transfer include not being in default, at least 25% of all Franchised Businesses required to be developed are open or under construction, all debts are paid, the buyer meets our current criteria for new Multi- Unit Developers, execution of a general release, payment of transfer fee, buyer personally guarantees all obligations | |
| n. Franchisor’s right of first | 11 | We have the right to match the offer. | |
| refusal to acquire multi- | |||
| unit developer’s business | |||
| o. Franchisor’s option to | Not applicable | Not applicable | |
| purchase multi-unit | |||
| developer’s business | |||
| p. Death or disability of multi-unit developer | 11 | The rights granted under the Multi-Unit Development Agreement will terminate upon your death or permanent disability, unless transferred to a third-party approved by us within six months. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 50–56)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the rights granted under the Multi-Unit Development Agreement will terminate if the multi-unit developer dies or becomes permanently disabled. However, there is an exception: the rights can be transferred to a third party, provided that Crave approves the transfer within six months of the death or disability. This provision ensures that Crave maintains control over who develops its franchises, even in unforeseen circumstances.
For a prospective Crave multi-unit developer, this means that planning for business succession is crucial. In the event of death or disability, the developer's estate or legal representative will need to quickly find a suitable buyer and obtain Crave's approval to avoid termination of the development agreement. This could involve legal and financial considerations to ensure a smooth transfer process.
This type of clause is relatively common in franchise agreements, as franchisors want to ensure that their brand and development plans are not negatively impacted by the death or disability of a franchisee or developer. The six-month window provides some flexibility, but it also places a time constraint on the transfer process. Crave's approval of the third party is also a standard practice, allowing them to vet the potential transferee's qualifications and financial stability.
Therefore, it is essential for prospective Crave multi-unit developers to discuss succession planning with legal and financial advisors to prepare for such contingencies. Having a plan in place can help ensure that the business continues smoothly and that the value of the development rights is preserved for the developer's heirs or estate.