If a Crepe De Licious franchisee is in default, can Crepe De Licious deny them the benefits of the System?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
ation obligations in Section 17; and the purported transferee may not operate the Franchised Business under the Marks or the System.
15.03 Transfer Conditions. We may, to the extent permitted by applicable law, condition and withhold our consent to a Transfer, when required under Section 15.02 until the transferee and you meet certain conditions. If a Transfer is to occur: (a) the proposed transferee must apply for a Crepe de licious franchise and must meet all of our then-current standards and requirements for becoming a Crepe de licious franchisee, in our sole discretion; (b) you or the proposed transferee must provide to us in writing the circumstances of the proposed Transfer; (c) the proposed transferee must provide to us the same supporting documents as a new franchise applicant; (d) you or the proposed transferee must pay us a transfer fee of $10,000 ($5,000 if the proposed transferee is an existing Crepe de licious franchisee), including a non-refundable $1,000 deposit that is due upon the request for approval of a Transfer (e) the proposed transferee must sign the form of franchise agreement and related documents we then offer to prospective franchisees, which agreement will provide for a new initial term of five (5) years, and the transferee's owners will sign the form of owners agreement or guaranty we then require of franchisees' owners; (f) the proposed transferee and its designated manager must complete to our satisfaction the initial training then required for new franchisees and their designated managers; (g) you or the proposed transferee must refurbish the Restaurant, Kiosk, or Food Truck to conform to our then-current standards and specifications; (h) we must receive general releases from you and each of your owners, and payment of all amounts then owed to us and our affiliates by you and your owners and affiliates, and the transferee and its owners and affiliates, under this Agreement or otherwise; (i) you must not be in default under this Agreement or any other agreement with us or any of our affiliates; (j) you must give us at least 30 days' prior written notice of any proposed Transfer; (k) you must reimburse us upon receipt of our invoice for any broker or other placement fees we incur as a result of the transfer; (l) the Restaurant, Kiosk, or Food Truck must be in operation for at least one (1) year, if we have not exercised right of first refusal;
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, if a franchisee is in default under the Franchise Agreement or any other agreement with Crepe De Licious or its affiliates, they will not be able to transfer their franchise. This is because Crepe De Licious may withhold consent for a transfer until certain conditions are met. One of these conditions is that the franchisee must not be in default under any agreement with Crepe De Licious or its affiliates.
This condition protects Crepe De Licious by ensuring that franchisees meet their financial and contractual obligations before transferring the business to someone else. It also ensures that the new franchisee starts with a clean slate, without inheriting any outstanding debts or unresolved issues from the previous franchisee. This is a fairly standard practice in franchising, as franchisors typically want to maintain the integrity and reputation of their brand by ensuring that all franchisees are in good standing.
For a prospective Crepe De Licious franchisee, this means it is crucial to remain in compliance with all agreements and obligations to Crepe De Licious. Failure to do so not only risks termination of the franchise agreement but also prevents the franchisee from selling the business if they are in default. This could significantly impact the franchisee's ability to recoup their investment and realize any potential profits from the sale of the franchise.