If Crave exercises its right to purchase assets related to the operation of the Franchised Business, what liabilities, if any, does Crave assume?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
14.8.1 At any time during the term of this Agreement, we shall have the right to purchase the Franchised Business from you by giving you written notice that we are exercising our option to purchase the Franchised Business pursuant to this Section 14.8. The purchase of the Franchised Business shall include, without limitation, leasehold improvements, equipment, furniture, fixtures, signs, inventory and the lease or sublease for the Accepted Location. We shall have the unrestricted right to assign this option to purchase. We or our assignee shall be entitled to all customary warranties and representations given by the seller of a business including, without limitation, representations and warranties as to (a) ownership, condition and title to assets; (b) liens and encumbrances relating to the assets; (c) validity of contracts inuring to us or affecting the assets; and (d) contingent or other liabilities.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, when Crave exercises its right to purchase the franchisee's business, it will be entitled to customary warranties and representations from the franchisee as the seller. These include assurances regarding ownership, condition, and title to assets, as well as any liens, encumbrances, or the validity of contracts affecting the assets. Crave will also seek representations and warranties related to contingent or other liabilities.
However, the FDD does not explicitly state that Crave assumes any specific liabilities of the Franchised Business when exercising its right to purchase. Instead, it focuses on the franchisee's responsibilities to provide warranties and representations about the business's assets and potential liabilities.
One exception exists regarding the lease. According to Section 18.11, if the lease is assigned to Crave, Crave will indemnify and hold harmless the franchisee and any lease guarantors from any liability arising out of the lease for the Franchised Business premises from and after the date of the assignment of the lease. This means Crave would take on the responsibility for the lease obligations from the date of assignment, protecting the franchisee from future lease-related liabilities. Prospective franchisees should carefully review the specific terms and conditions related to the purchase of the Franchised Business and the assignment of the lease to fully understand their obligations and potential liabilities.