What are the consequences for an Ella Cafe franchisee who attempts to transfer the franchise in violation of the agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Developer understands and acknowledges that the rights and duties set forth in this Agreement are personal to Developer and that Franchisor has granted rights under this Agreement in reliance on the business skill, financial capacity, and personal character of Developer and its Owners.
Accordingly, neither Developer nor any Owner, nor any successor or assign of Developer or any Owner, will sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise dispose of or encumber any direct or indirect interest in this Agreement or in the Business Entity without the prior written consent of Franchisor.
Franchisor will not unreasonably withhold its consent to a transfer, but may condition its consent on satisfaction of any or all of the following.
- 8.3.1.
Developer has provided Franchisor the following at least 120 days prior to the proposed closing date of the proposed transfer: (a) written request for Franchisor's consent to the transfer; (b) payment of the non-refundable transfer fee in the amount set forth in the Key Terms, plus reimbursement of Franchisor's reasonable attorneys' fees; and (c) a copy of the proposed asset purchase/transfer agreements, including sale terms.
- 8.3.2.
The transferee has demonstrated to Franchisor's satisfaction that the transferee meets Franchisor's then-current educational, managerial, and business standards; possesses a good moral character, business reputation, and credit rating; has the aptitude and ability to operate the Coffee House; and meets Franchisor's then-current financial requirements to become an Ella Café developer.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, franchisees must obtain prior written consent from the company before transferring any interest in the Development Agreement or the Business Entity. Ella Cafe acknowledges that the rights and duties outlined in the agreement are personal to the developer, and the franchisor has granted rights based on the developer's business skill, financial capacity, and personal character.
To obtain consent for a transfer, the developer must provide Ella Cafe with a written request at least 120 days before the proposed closing date, pay a non-refundable transfer fee (amount specified in the Key Terms), reimburse Ella Cafe's reasonable attorney fees, and provide a copy of the proposed asset purchase/transfer agreements, including sale terms. The transferee must also demonstrate that they meet Ella Cafe's then-current educational, managerial, and business standards, possess a good moral character, business reputation, and credit rating, have the aptitude and ability to operate the Coffee House, and meet Ella Cafe's then-current financial requirements to become an Ella Cafe developer.
While the document outlines the requirements for a transfer, it does not explicitly state the consequences for a franchisee who attempts to transfer the franchise in violation of the agreement. A prospective franchisee should seek clarification from Ella Cafe regarding the specific penalties or repercussions for unapproved transfers, as these could include breach of contract, termination of the franchise agreement, and legal action.