Is foreclosure upon a Creative World School School considered a 'transfer'?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
r 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 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, foreclosure upon a Creative World School is considered a transfer. Specifically, the FDD states that the loss of possession, control, or management of the School due to foreclosure is included in the definition of a transfer.
This means that if a Creative World School franchisee's school is foreclosed upon, it is treated as a transfer of the franchise agreement. As such, the franchisee must adhere to the conditions for approval of transfer as outlined in the franchise agreement.
The conditions for transfer approval include ensuring the transferee meets Creative World School's standards for franchisees, paying all outstanding royalties and other amounts owed to Creative World School, completing the standard training program, agreeing to be bound by the franchise agreement, and paying a transfer fee. The transfer fee is the greater of $20,000 or 25% of the then-current initial franchise fee. Additionally, the franchisee must execute a general release of claims against Creative World School. These conditions ensure that any new operator of the Creative World School meets the franchisor's standards and that all financial obligations are settled.
Prospective franchisees should be aware of these conditions, as failing to meet them could result in the disapproval of the transfer and potential termination of the franchise agreement. Understanding the implications of foreclosure as a transfer is crucial for franchisees to protect their investment and maintain a good relationship with Creative World School.