What conditions can Ella Cafe impose when granting consent for a franchise transfer?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
e's approval or prior notice to Franchisee, provided that the buyer, assignee or transferee agrees in writing to assume all of Franchisor's obligations under this Agreement. Franchisor and its Indemnitees will not be liable for obligations of the transferee arising after the date of transfer.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Franchisor 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 Franchisor at least 60 days prior notice of the proposed Transfer, and without obtaining Franchisor' consent. In granting any such consent, Franchisor may impose conditions, including, without limitation, the following:
- (i) Franchisor receives a transfer fee of $10,000 ("Transfer Fee") plus any broker fees and other out-of-pocket costs incurred by Franchisor, including attorneys' fees
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the franchisor can impose several conditions when a franchisee seeks to transfer their franchise. Ella Cafe requires at least 60 days' prior notice before any transfer can occur, and the franchisee must obtain the franchisor's consent.
Ella Cafe can mandate that it receives a $10,000 transfer fee, in addition to broker fees and any other out-of-pocket costs, including attorney's fees, that the franchisor incurs. The prospective franchisee must also complete Ella Cafe's franchise application process and meet the standards for new franchisees at that time, securing approval from Ella Cafe. This ensures that any new franchisee meets the current qualifications and standards of the Ella Cafe system.
Furthermore, Ella Cafe stipulates that the proposed franchisee cannot be a competitor. The new franchisee must execute the franchisor's current form of franchise agreement, which may include provisions that differ significantly from the original agreement. All owners of the proposed franchisee must also provide a guaranty, as detailed in another section of the franchise agreement. These conditions allow Ella Cafe to maintain control over who joins their franchise system and to ensure consistency and quality across all locations.