Can the Franchisee or Covenantor assign their obligations under the Crawlspace Medic agreement?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2. Restrictions on Transfers by Franchisee. Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval. Franchisor may void any transfer made without such approval.
- 16.3.
Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, a franchisee's rights and duties under the franchise agreement are personal and based on the franchisor's assessment of the franchisee's character, skills, aptitude, business ability, and financial capacity. Therefore, the franchisee cannot directly or indirectly sell, assign, transfer, give, devise, convey, or encumber the agreement or any rights or interests without the prior written consent of Crawlspace Medic. Any transfer made without this approval may be voided by Crawlspace Medic.
This restriction on transfer applies to the franchise agreement itself, the franchise, the franchised business, and any assets related to it, except for transactions in the ordinary course of business. The restriction also applies to transfers that may occur by operation of law, emphasizing the need for franchisor consent in all scenarios.
While the FDD discusses transfer restrictions for the franchisee, it does not explicitly address whether a Covenantor can assign their obligations under the Crawlspace Medic agreement. A prospective franchisee should seek clarification from the franchisor regarding the assignability of obligations by the Covenantor to fully understand the contractual obligations and restrictions.