Under the Crave franchise agreement, what is a franchisee's obligation regarding transferors and transferees?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
replacing, upgrading or otherwise dealing with such assets as required or permitted by this Agreement), without our prior written consent. Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material event of default under this Agreement.
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;
(b) You and your affiliates shall not be in default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between you or any of your affiliates and us or any of our affiliates at the time of transaction;
(c) The transferor and its principals (if applicable) shall have executed a general release, in a form reasonably satisfactory to us, of any and all claims against us, our officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees of each of them, in their corporate and individual capacities, including, without limitation, claims arising under this Agreement and federal, state and local laws, rules and regulations;
(d) The transferee shall demonstrate to our reasonable satisfaction that transferee meets the criteria considered by us when reviewing a prospective franchisee's application for a franchise, including, but not limited to, our educational, managerial and business standards; transferee's good moral character, business reputation and credit rating; transferee's aptitude and ability to conduct the business franchised herein (as may be evidenced by prior related business experience or otherwise); transferee's financial resources and capital for operation of the business; and the geographic proximity and number of other Franchised Businesses owned or operated by transferee;
(e) The transferee shall enter into a written agreement, in a form reasonably satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants and agreements contained in this Agreement; and, if transferee is a corporation or a partnership, transferee's shareholders, partners or other investors, as applicable, shall execute such agreement as transferee's principals and guarantee the performance of all such obligations, covenants and agreements;
(f) The transferee shall execute, for a term ending on the expiration date of this Agreement and with such successor terms as may be provided by this Agreement, the standard form franchise agreement then being offered to new System franchisees and other ancillary agreements as we may require for the Franchised Business, which agreements shall supersede this Agreement and its ancillary documents in all respects and the terms of which agreements may differ from the terms of this Agreement, including, without limitation, the then-current Royalty Fee and Brand Development Fee (as applicable); provided, however, that the transferee shall not be required to pay any initial franchise fee;
(g) The transferee, at its expense, shall renovate, modernize and otherwise upgrade the Franchised Business and, if applicable, any delivery vehicles to conform to the then-current standards and specifications of the System, and shall complete the upgrading and other requirements which conform to the System-wide standards within the time period reasonably specified by us;
(h) The transferor shall remain liable for all of the obligations to us in connection with the Franchised Business incurred prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by us to evidence such liability;
(i) At the transferee's expense, the transferee, the transferee's General Manager and/or any other applicable Franchised Business personnel shall complete any training programs then in effect for franchisees of Crave businesse
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if a franchisee wishes to transfer their interest in the Franchised Business, certain obligations must be met by both the transferor (the current franchisee) and the transferee (the new franchisee). The transferor and transferee must jointly apply to Crave for consent, which Crave will not unreasonably withhold.
As a condition of approval, Crave may require that all outstanding monetary and other obligations to Crave or its affiliates be satisfied. The transferor and its principals must execute a general release of any claims against Crave and its affiliates. The transferee must demonstrate that they meet Crave's criteria for new franchisees, including educational, managerial, and business standards, good moral character, credit rating, aptitude, financial resources, and the proximity/number of other Crave businesses they own. The transferee must also enter into a written agreement assuming all obligations of the franchise agreement, with shareholders or partners guaranteeing performance if the transferee is a corporation or partnership.
The transferee must execute the standard form franchise agreement then being offered, which will supersede the original agreement and may have different terms, including royalty and brand development fees. However, the transferee is not required to pay an initial franchise fee. The transferee is responsible for renovating and upgrading the Franchised Business to meet current system standards within a reasonable timeframe specified by Crave. The transferor remains liable for all obligations incurred before the transfer date and must execute any documents to evidence this liability. The transferee, their General Manager, and other personnel must complete any required training programs. Finally, the franchisee must pay Crave a $5,000 transfer fee to cover the costs of reviewing the transfer application, including training, legal, and accounting fees.