What are the conditions for an individual Ella Cafe developer to transfer their interest to a business entity?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
agrees that Franchisor and/or its Affiliates may sell their assets, the Marks, the Copyrighted Works, or the System; may sell securities in a public offering or in a private placement; may merge, acquire other corporations, or be acquired by another corporation; and may undertake a refinancing, recapitalization, leveraged buy-out, or other economic or financial restructuring. With regard to any of the above sales, assignments, and dispositions, Developer expressly and specifically waives any claims, demands, or damages arising from or related to the loss of Franchisor's name, the Marks (or any variation thereof), the Copyrighted Works, the System, and/or the loss of association with or identification of Ella Coffee Company, LLC as the franchisor under this Agreement.
- 8.2. Transfer by Individual Developer to Business Entity for Convenience. If Developer is an individual or individuals, Developer may transfer its interest in this Agreement to a Business Entity for convenience of operation by signing Franchisor's form of assignment and assumption agreement if: (a) the Business Entity is formed solely for purposes of developing and/or operating Coffee Houses; (b) Developer provides Franchisor a copy of the Business Entity's formation and governing documents and a certificate of good standing from the jurisdiction under which the Business Entity was formed; (c) Developer and its Affiliates are in compliance with this Agreement and all other agreements with Franchisor or its Affiliates;
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, an individual developer can transfer their interest in the Development Agreement to a business entity for operational convenience, provided certain conditions are met. This transfer requires the developer to sign Ella Cafe's assignment and assumption agreement form.
The conditions include that the business entity must be formed solely for developing and/or operating Ella Cafe locations. The developer must provide Ella Cafe with a copy of the business entity's formation and governing documents, along with a certificate of good standing from the relevant jurisdiction. Furthermore, the developer and their affiliates must be in compliance with the Development Agreement and all other agreements with Ella Cafe or its affiliates.
Additionally, the developer is responsible for paying Ella Cafe's reasonable attorney's fees incurred in documenting the transfer. The developer must also execute a general release, in a form satisfactory to Ella Cafe, releasing any and all claims against Ella Cafe and its affiliates, including their officers, directors, managers, shareholders, agents, and employees, in their corporate and individual capacities. This release covers claims arising under federal, state, and local laws, rules, and ordinances, but it will not be inconsistent with any state law regulating franchising. These conditions ensure that Ella Cafe maintains control over who is developing its franchises and that all legal and financial obligations are met during the transfer process.