Must a Crave Cookies franchisee provide a guaranty when transferring for convenience of ownership?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.3 Transfer for Convenience of Ownership. If Franchisee is an individual, Franchisee may Transfer this Agreement to a corporation or limited liability company formed for the convenience of ownership after at least 15 days' notice to Crave Cookies Franchising, if, prior to the Transfer: (1) the transferee provides the information required by Section 2.3; (2) Franchisee provides copies of the entity's charter documents, by-laws (or operating agreement) and similar documents, if requested by Crave Cookies Franchising, (3) Franchisee owns all voting securities of the corporation or limited liability company, and (4) Franchisee provides a guaranty in accordance with Section 2.5.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, if a franchisee is an individual and wishes to transfer the franchise agreement to a corporation or limited liability company for convenience of ownership, they must provide a guaranty. This transfer can occur after giving Crave Cookies at least 15 days' notice.
Specifically, prior to the transfer, the franchisee must meet several conditions. First, the transferee (the corporation or LLC) must provide the information required by Section 2.3 of the Franchise Agreement. Second, the franchisee must provide copies of the entity's charter documents, by-laws (or operating agreement), and similar documents if Crave Cookies requests them. Third, the franchisee must own all voting securities of the corporation or limited liability company. Finally, the franchisee must provide a guaranty in accordance with Section 2.5.
This requirement ensures that even when the franchise is transferred to a business entity, the original franchisee remains personally liable for the obligations under the Franchise Agreement. This is a common practice in franchising, as it provides Crave Cookies with added security and assurance that the franchise will be properly managed and that all financial and contractual obligations will be met.