Who is liable for obligations incurred before the Crave franchise transfer's effective date?

According to Crave's 2025 Franchise Disclosure Document, the transferor, or the original franchisee, remains liable for all obligations to Crave in connection with the franchised business that were incurred prior to the effective date of the transfer. This means that if the franchisee had any outstanding debts, unresolved disputes, or other liabilities to Crave before the franchise was transferred to a new owner, the original franchisee is still responsible for resolving those issues.

To ensure this liability is clear, the transferor must execute any instruments reasonably requested by Crave to evidence such liability. This could include signing documents that acknowledge the debt or reaffirm the franchisee's commitment to fulfilling those obligations. This requirement protects Crave's financial interests and ensures that any pre-existing issues are addressed even after the franchise changes hands.

For a prospective franchisee purchasing an existing Crave location, this clause offers some assurance that they will not inherit the previous owner's debts or unresolved issues with the franchisor. However, it is crucial for the new franchisee to conduct thorough due diligence and carefully review the franchise agreement to fully understand their own obligations and liabilities from the date of transfer forward. They should also seek legal counsel to ensure they are protected from any potential risks associated with the transfer.