What condition must Creative World School franchisees meet to have a transfer approved?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
divorce, insolvency or corporate or partnership dissolution proceeding or otherwise by operation of law;
(v) transfer of an interest in you, this Agreement or the School, in the event of your death or the death of one of your owners, by will, declaration of or transfer in trust or under the laws of intestate succession; or
(vi) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the School or your transfer, surrender or loss of possession, control or management of the School.
15.03 Conditions for Approval of Transfer. If you (and your owners) are in full compliance with this Agreement then we will approve a transfer that meets all the applicable requirements of this Section. The proposed transferee and its direct and indirect owners must be individuals of good character and otherwise meet our then applicable standards for School franchisees. A transfer of ownership, possession or control of the School may be made only in conjunction with a transfer of this Agreement. If the transfer is of this Agreement or a controlling interest in you, or is one of a series of transfers which in the aggregate constitute the transfer of this Agreement or a controlling interest in you, all of the following conditions must be met prior to or concurrently with the effective date of the transfer:
- (a) the transferee has sufficient business experience, aptitude and financial resources to Construct (if necessary) and operate the School;
- (b) you have paid all Royalties, Marketing Fund contributions, amounts owed for purchases from us and all other amounts owed to us or to third-party creditors and have submitted all required reports and statements;
- (c) the transferee (or its Manager) and its managerial employee (if different from your manager) have agreed to complete our standard training program;
- (d) the transferee has agreed to be bound by all of the terms and conditions of this Agreement;
- (e) you or the transferee pay us a t
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to the 2025 Creative World School FDD, a franchisee must be in full compliance with the Franchise Agreement to have a transfer approved. This means the franchisee must meet all applicable requirements outlined in Section 15.03 of the agreement. The proposed transferee must also meet Creative World School's standards for franchisees and be of good character. A transfer of ownership can only occur with a transfer of the Franchise Agreement itself.
Specifically, if the transfer involves the agreement or a controlling interest, several conditions must be met. The transferee needs sufficient business experience, aptitude, and financial resources to construct (if necessary) and operate the school. All outstanding royalties, marketing fund contributions, purchase amounts, and other debts to Creative World School or third-party creditors must be paid. Additionally, all required reports and statements must be submitted.
The transferee (or its manager) and its managerial employee (if different from the franchisee's manager) must complete Creative World School's standard training program. The transferee must agree to be bound by all terms and conditions of the Franchise Agreement. A transfer fee, equal to the greater of $20,000 or 25% of the then-current initial franchise fee, must be paid to Creative World School. The franchisee (and transferring owners) must execute a general release of claims against Creative World School and its affiliates.
Finally, Creative World School must approve the material terms and conditions of the transfer, ensuring that the price and payment terms do not negatively impact the transferee's operation of the school. These conditions are typical in franchising to ensure brand consistency and the continued success of the franchise system under new ownership.