Under what conditions can the Crave Development Rights be sold, assigned, transferred, or encumbered?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2 The Development Rights granted hereunder are personal to you and cannot be sold, assigned, transferred or encumbered, in whole or in part, except as stated in Section 11 hereof.
Therefore, you agree that any attempt to assign this Agreement, prior to the time that at least twenty-five percent (25%) of the Franchised Businesses to be constructed hereunder are opened or under construction shall be deemed to be an event of default.
- 11.3 If you receive from an unaffiliated third party and desire to accept a bona fide written offer to purchase your business, Development Rights and interests, we shall have the option, exercisable within thirty (30) days after receipt of written notice setting forth the name and address of the prospective purchaser, the price and terms of such offer, and a copy of such offer and the other information stated in this Section 11.3, to purchase such business, Development Rights and interests, including your right to develop sites within the Development Area, on the same terms and conditions as offered by said third party.
In order that we may have information sufficient to enable us to determine whether to exercise this option, we may require you to deliver to us certified financial statements as of the end of your most recent fiscal year and such other information about your business and operations as we may request.
If we decline or do not accept the offer in writing within thirty (30) days, you may, within thirty (30) days from the expiration of the option period, sell, assign and transfer your business, Development Rights and interest to said third party, provided we have consented to such transfer as required by this Section 11.
Any material change in the terms of the offer prior to closing of the sale to such third party shall constitute a new offer, subject to the same rights of first refusal by us or our nominee, as in the case of an initial offer.
Our failure to exercise the option afforded by this Section 11.3 shall not constitute a waiver of any other provision of this Agreement, including all of the requirements of this Section with respect to the proposed transfer.
- 11.4 You acknowledge and agree that the restrictions on transfer imposed herein are reasonable and are necessary to protect the Development Rights, the System and the Marks, as well as our reputation and image, and are for the protection of us, you and other multi-unit developers and franchisees.
Any assignment or transfer permitted by this Section 11 shall not be effective until we receive a completely executed copy of all transfer documents, and we consent in writing thereto.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, the Development Rights granted to a franchisee are personal and generally cannot be sold, assigned, transferred, or encumbered, either in whole or in part. However, Section 11 of the agreement outlines specific conditions under which such actions may be permissible.
A franchisee can transfer their Development Rights if they receive a bona fide written offer from an unaffiliated third party to purchase their business, Development Rights, and interests. In this case, Crave has the option to purchase these rights on the same terms and conditions as the third party's offer. Crave must exercise this option within 30 days of receiving written notice of the offer, which includes the purchaser's information, price, terms, and a copy of the offer. If Crave declines or does not accept the offer within the 30-day period, the franchisee has 30 days to proceed with the sale to the third party, provided Crave consents to the transfer. Any material changes to the offer's terms constitute a new offer, subject to Crave's right of first refusal.
Crave emphasizes that any attempt to assign the agreement before at least 25% of the Franchised Businesses to be constructed are opened or under construction is considered an event of default. Any permitted assignment or transfer is not effective until Crave receives a fully executed copy of all transfer documents and provides written consent. These restrictions are in place to protect the Development Rights, the System, the Marks, and Crave's reputation, as well as the interests of other multi-unit developers and franchisees.