Can Creative Colors engage in a merger or acquisition?
Creative_Colors Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. This Agreement and all rights hereunder can be assigned and transferred by Franchisor and, if so, shall be binding upon and inure to the benefit of Franchisor's successors and assigns; provided, however, that with respect to any assignment resulting in the subsequent performance by the assignee of the functions of Franchisor, the assignee shall:
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- At the time of such assignment, be financially responsible and economically capable of performing the obligations of Franchisor hereunder; and
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- Expressly assume and agree to perform such obligations. Specifically, and without limitation to the foregoing, Franchisee expressly agrees that Franchisor may sell its assets, Marks or System outright to a third party; may make a public offering of securities; may engage in a private placement of some or all of its securities; may merge, acquire other corporations or entities, or be acquired by another corporation or other entity; may undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring; and, with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or related to the loss of said Marks (or any variation thereof) and/or the loss of association with or identification of CREATIVE COLORS INTERNATIONAL, INC. as Franchisor hereunder. Nothing contained in this Agreement shall require Franchisor to remain in the business in the event that Franchisor exercises its rights hereunder to assign its rights in this Agreement.
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- Franchisor may change Franchisor's ownership or form and/or assign this Agreement and any other agreement to a third party without restriction. After Franchisor's assignment of this Agreement to a third party who expressly assumes the obligations under this Agreement, Franchisor no longer will have any performance or other obligations under this Agreement.
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Source: Item 23 — RECEIPT (FDD pages 69–217)
What This Means (2025 FDD)
According to Creative Colors' 2025 Franchise Disclosure Document, Creative Colors has the right to merge with or acquire other companies. The franchise agreement outlines Creative Colors' ability to sell assets, trademarks, or the entire system to a third party. They can also make public offerings of securities, engage in private placements, merge with or acquire other entities, or be acquired themselves. Additionally, Creative Colors can undertake refinancing, recapitalization, leveraged buyouts, or other financial restructurings.
This flexibility allows Creative Colors to adapt to changing market conditions and pursue growth opportunities. For a franchisee, this means the brand could evolve through new ownership or financial structures. However, the agreement also includes a waiver where the franchisee relinquishes any claims or damages related to the loss of the brand's marks or association with Creative Colors, Inc., due to these changes.
Creative Colors also has the right to assign the agreement to a third party without restriction, and after the assignment, Creative Colors will no longer have any performance or other obligations under the agreement. This clause protects the franchisee by ensuring that any assignee expressly assumes the obligations of the agreement. This provides assurance that the franchisee's rights and the franchisor's responsibilities will continue to be upheld even if the ownership or structure of Creative Colors changes.