Does the definition of 'transfer' for a Creative World School franchise include direct assignments?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
XV.TRANSFER.
- 15.01 By Us. This Agreement is fully transferable by us, and inures to the benefit of any transferee or other legal successor to our interests, as long as such transferee or successor agrees to be bound by, and assumes all of our continuing obligations under, this Agreement.
- 15.02 By You. You understand and acknowledge that the rights and duties created by this Agreement are personal to you (or, if you are a Business Entity, to your owners) and that we have granted the Franchise to you in reliance upon our perceptions of your (or your owners') individual or collective character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement (or any interest in it) nor any ownership or other interest that would reduce your voting or equity interest to less than 51% in you or the School may be transferred without our prior written approval. Any transfer without such approval constitutes a breach of this Agreement and is void and of no effect. As used in this Agreement, the term "transfer" includes your (or your owners') voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (a) this Agreement; (b) you; or (c) the School.
An assignment, sale, gift or other disposition includes the following events:
(i) transfer of ownership of capital stock or a partnership interest;
(ii) merger or consolidation or issuance of additional securities or interests representing an ownership interest in you;
(iii) any issuance or sale of your stock or any security convertible to your stock;
(iv) transfer of an interest in you, this Agreement or the School in a 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
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to Creative World School's 2025 Franchise Disclosure Document, the term "transfer" does include direct assignments. The FDD specifies that the rights and duties within the Franchise Agreement are personal to the franchisee, and Creative World School has granted the franchise based on their assessment of the franchisee's character, skills, business ability, and financial capacity.
As such, any transfer of the agreement or any ownership interest that reduces the franchisee's voting or equity interest below 51% requires prior written approval from Creative World School. Failure to obtain this approval constitutes a breach of the agreement and renders the transfer void. The definition of "transfer" is broad, encompassing voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of any interest in the agreement, the franchisee's entity, or the Creative World School itself.
The franchise agreement lists several events that are considered a transfer. These include the transfer of ownership of capital stock or partnership interest, mergers or consolidations, issuance of additional securities, transfers due to divorce or insolvency, transfers upon death, and the pledge of the agreement or ownership interest. This comprehensive definition ensures that any change in control or ownership is subject to Creative World School's approval, allowing them to maintain standards and protect their brand.
For a prospective Creative World School franchisee, this means that any plan to sell, assign, gift, or otherwise dispose of any portion of their franchise or ownership interest must be carefully considered and executed only with the franchisor's explicit written consent. This requirement is in place to protect the Creative World School brand and ensure that any new owner or partner meets the franchisor's standards.