Must the transferee agree to be bound by the terms of the Creative World School Franchise Agreement?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Franchise Disclosure Document, a transfer of ownership, possession, or control of the school requires a transfer of the Franchise Agreement. For a transfer of the agreement or a controlling interest, the transferee must agree to be bound by all the terms and conditions of the existing Franchise Agreement. This requirement ensures that the new owner adheres to the standards and obligations set forth by Creative World School.
In practical terms, this means that someone buying a Creative World School franchise cannot renegotiate the core terms of the agreement. They step into the shoes of the previous franchisee, assuming all rights and responsibilities. This provides consistency for the Creative World School system and protects the brand's standards.
In addition to agreeing to the existing terms, the transferee must also meet other conditions. They need to demonstrate sufficient business experience, aptitude, and financial resources to construct (if necessary) and operate the school. The transferee (or its Manager) and its managerial employee (if different from your manager) must also complete Creative World School's standard training program. These stipulations help ensure the ongoing success and quality of the Creative World School franchise under new ownership.
Furthermore, the transferring franchisee must pay all outstanding royalties, marketing fund contributions, and other debts before the transfer can proceed. Both the transferring franchisee and the transferee must also pay a transfer fee to Creative World School, which is the greater of $20,000 or 25% of the then-current initial franchise fee. Finally, the transferring franchisee must execute a general release of claims against Creative World School. These financial and legal requirements protect Creative World School's interests and ensure a smooth transition of ownership.