Must a proposed assignee meet Crown Gold Exchange's standards for new franchisees?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
TRANSFERS**
- 15.1 By Crown Gold Franchising. Crown Gold Franchising may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Crown Gold Franchising may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Crown Gold Franchising entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Crown Gold Franchising at least 60 days prior notice of the proposed Transfer, and without obtaining Crown Gold Franchising's consent. In granting any such consent, Crown Gold Franchising may impose conditions, including, without limitation, the following:
- (i) Crown Gold Franchising receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Crown Gold Franchising;
- (ii) the proposed assignee and its owners have completed Crown Gold Franchising's franchise application processes, meet Crown Gold Franchising's then-applicable standards for new franchisees, and have been approved by Crown Gold Franchising as franchisees;
- (iii) the proposed assignee is not a Competitor;
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise, the proposed assignee must meet Crown Gold Exchange's standards for new franchisees. Specifically, the proposed assignee and their owners must complete Crown Gold Franchising's franchise application processes and be approved by Crown Gold Franchising as franchisees.
In addition to meeting the standards for new franchisees, the assignee must also execute Crown Gold Franchising's then-current form of franchise agreement and related documents, which may contain materially different provisions than the original agreement. However, the assignee will not be required to pay an initial franchise fee. The proposed assignee must also not be a competitor of Crown Gold Exchange.
Furthermore, Crown Gold Exchange requires a transfer fee of $10,000 plus any broker fees and other out-of-pocket costs incurred by Crown Gold Franchising. All owners of the proposed assignee must provide a guaranty, and the franchisee must have paid all monetary obligations to Crown Gold Franchising and its affiliates. The proposed assignee and its owners and employees must also undergo any training that Crown Gold Franchising may require. Finally, the franchisee, its owners, and the transferee and its owners must execute a general release of Crown Gold Franchising.