Can an Ella Cafe developer give away their interest in the Franchise Agreement without Ella Cafe's consent?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
per and its Affiliates are in compliance with this Agreement and all other agreements with Franchisor or its Affiliates; (d) Developer pays
Franchisor its reasonable attorneys' fees incurred to document such transfer; and (e) Developer executes a general release in a form satisfactory to Franchisor of any and all claims against Franchisor and its Affiliates and their respective officers, directors, managers, shareholders, agents, and employees in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances; provided, however, that any release will not be inconsistent with any state law regulating franchising.
- 8.3. Transfer by Developer and/or Owners. 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;
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a developer cannot give away their interest in the Franchise Agreement without prior written consent from Ella Cafe. The FDD emphasizes that the rights and duties within the agreement are personal to the developer, and Ella Cafe has granted these rights based on the developer's business skills, financial capacity, and personal character.
Specifically, neither the developer, any owner, nor any successor or assign can sell, assign, transfer, convey, give away, pledge, mortgage, or otherwise dispose of or encumber any direct or indirect interest in the agreement or the business entity without Ella Cafe's prior written consent. Ella Cafe states that it will not unreasonably withhold consent to a transfer, but it may impose certain conditions.
These conditions include providing Ella Cafe with a written request for consent at least 120 days before the proposed transfer, paying a non-refundable transfer fee (as specified in the Key Terms), reimbursing Ella Cafe's legal fees, and submitting a copy of the proposed asset purchase/transfer agreements. Additionally, the transferee must meet Ella Cafe's current standards for education, management, business acumen, moral character, credit rating, and financial requirements. Any transfer without prior written consent from Ella Cafe is considered null and void and constitutes a material breach of the agreement.