What section of the Dryject Franchise Agreement outlines the terms for selling, assigning, transferring, or encumbering the agreement?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
The provisions of this Section shall survive any termination or expiration of this Agreement or any renewals thereof.
28. ASSIGNMENT; CONDITIONS AND LIMITATIONS
If You are not an individual, the terms of this Section and of Section 31 hereof, shall also be deemed to apply to any management agreement, sale, resale, pledge, assignment, transfer or encumbrance of voting stock of, or other ownership interest in You which would, alone or together with other related, previous, simultaneous or proposed transfers, result in a change of ownership or management "control" of You.
As used in this Agreement, the term "transfer" includes Your (or an Owner's) voluntary, involuntary, direct or indirect, assignment, sale, gift, or other disposition of any interest in (1) this Agreement, (2) the Franchisee entity, (3) the Franchised Business governed by this Agreement, or (4) all or a substantial portion of the assets of the Franchised Business. It also includes an assignment of day-to-day operational responsibilities for the Franchised Business pursuant to an operating agreement or otherwise. A transfer of the Franchised Business' ownership, possession,
or control, or all or a substantial portion of Your assets, may be made only with a transfer of this Agreement which complies with the terms of this Agreement.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, Section 28 of the franchise agreement, titled "ASSIGNMENT; CONDITIONS AND LIMITATIONS," addresses the terms and conditions for selling, assigning, transferring, or encumbering the agreement. This section clarifies that if the franchisee is not an individual, the terms outlined in Section 28 and Section 31 also apply to any management agreement, sale, resale, pledge, assignment, transfer, or encumbrance of voting stock or other ownership interest that could result in a change of ownership or management control.
The Dryject FDD defines "transfer" broadly, including voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other dispositions of any interest in the agreement, the franchisee entity, the franchised business, or a substantial portion of the business's assets. It also encompasses assigning day-to-day operational responsibilities through an operating agreement. Any transfer of ownership, possession, or control of the business or its assets must include a transfer of the franchise agreement that complies with the agreement's terms.
Dryject requires that any permitted assignment or transfer is not effective until they receive a fully executed copy of all transfer documents and provide written consent. Furthermore, franchisees do not have the right to transfer the agreement until the franchised business has commenced operations. These restrictions on transfer are in place to protect Dryject's franchise system, trade secrets, operating procedures, reputation, and the rights of other franchisees.
Dryject also stipulates that consent to a transfer or assignment is a subjective determination, considering factors such as the transferee assuming all obligations, payment of debts to Dryject, absence of default by the franchisee, the transferee not operating a similar business (with exceptions for other Dryject franchisees), and the transferee meeting Dryject's requirements for new franchisees, including reputation, experience, financial stability, and commitment to the business. Dryject must receive all reasonably required information about the proposed transferee, and a stop transfer order will be in effect against the transfer of any securities except those permitted by the agreement.