What is Creative World School's requirement of a transferee or successor to their interests?
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 transfer fee equal to the greater of: (a) $20,000 or (b) 25% of our then-current initial franchise fee. Cost of training the transferee (or its Manager) and its managerial personnel is included in the fee;
- (f) you (and your transferring owners) have executed a general release, in form satisfactory to us, of any and all claims against us and our shareholders, officers, directors, employees and agents;
- (g) we have approved the material terms and conditions of such transfer and determined that the price and terms of payment will not adversely affect the transferee's operation of the School;
- (h) if you or your owners finance any part of the sale price of the transferred interest, you and/or your owners have agreed that all of the transferee's obligations pursuant to any promissory notes, agreements or security interests that you or your owners have reserved in the School are subordinate to the transferee's obligation to pay Royalties, Marketing Fund contributions and other amounts due to us and otherwise to comply with this Agreement;
- (i) you and your transferring owners have executed a non-competition covenant in favor of us and the transferee agreeing to be bound, commencing on the effective date of the transfer; and
(j) you and your transferring owners have agreed that you and they will not directly or indirectly at any time or in any manner (except with respect to other Schools you own a
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to Creative World School's 2025 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise, several conditions must be met to gain approval from Creative World School. The proposed transferee must meet the standards for franchisees that Creative World School has at the time of the transfer. A transfer of ownership can only occur with the transfer of the franchise agreement itself.
Prior to the transfer, the franchisee must be in full compliance with the existing franchise agreement. The transferee must demonstrate sufficient business experience, aptitude, and financial resources to operate the school, including construction if necessary. All outstanding payments to Creative World School and third-party creditors must be settled, and all required reports submitted. The transferee and their manager must complete Creative World School's standard training program. The transferee must agree to adhere to all terms and conditions of the existing franchise agreement.
A transfer fee is required, which is the greater of $20,000 or 25% of Creative World School's then-current initial franchise fee. This fee covers the cost of training the transferee and their managerial personnel. The franchisee must also execute a general release of claims against Creative World School. Creative World School must approve the material terms of the transfer, ensuring the price and payment terms do not negatively impact the school's operation.
Furthermore, if the franchisee finances any part of the sale, the transferee's obligations to Creative World School take precedence. Both the franchisee and transferring owners must sign a non-competition covenant and agree not to identify themselves with Creative World School in any future business endeavors (except for other Creative World School locations they may own). If the transfer occurs among current owners, the transfer fee is waived, but the transferee must cover administrative costs incurred by Creative World School. These stipulations ensure that any transfer maintains the standards and financial stability of the Creative World School franchise system.