What documents related to the sale must an Ella Cafe developer provide for a transfer?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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; 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.
- 8.3.3.
All of Developer's accrued monetary obligations and all other outstanding obligations to Franchisor, its Affiliates, and Developer's third-party suppliers (including Developer's landlord) are, or will be at the time of the transfer, current and fully paid and satisfied, and Developer must be in full compliance with this Agreement and any other agreement between Developer and its Affiliates and Franchisor and its Affiliates, Developer's suppliers, and Developer's landlord.
Without limiting the foregoing, Developer must have developed, and it or its Affiliates must have in operation at the time of the proposed transfer, at least 50% of the Coffee Houses required to be developed under this Agreement.
- 8.3.4.
Developer has refurbished the Coffee House premises prior to the closing of the transfer such that the Coffee House meets Franchisor's then-current image and equipment requirements for new Coffee Houses, or so that it meets Franchisor's then-current repair and maintenance standards, whichever Franchisor chooses at its sole discretion.
- 8.3.5.
Developer and each transferor Owner have executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its Affiliates and their respective officers, directors, 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.
- 8.3.6.
The transferee executes Franchisor's then-current form of Development Agreement, the terms of which may be materially different from the terms of this Agreement and may include, among other things, a different initial franchise fee, a different percentage royalty fee, and different advertising obligations to be set forth in the Franchise Agreements to be executed hereunder.
The term of such agreement will be the remaining Term of this Agreement at the time of transfer.
If the transferee is a Business Entity, then each of the transferee's Owners must sign Franchisor's then-current form of personal guaranty.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a developer seeking to transfer their interest must provide several documents to Ella Cafe at least 120 days before the proposed transfer date. These include a written request for consent to the transfer, payment of a non-refundable transfer fee (the amount of which is set forth in the Key Terms), reimbursement of Ella Cafe's reasonable attorney's fees, and a copy of the proposed asset purchase/transfer agreements, including sale terms.
In addition to these documents, the prospective transferee must demonstrate that they meet Ella Cafe's then-current educational, managerial, and business standards. They must also possess a good moral character, business reputation, and credit rating, and have the aptitude and ability to operate the Coffee House, as well as meet Ella Cafe's then-current financial requirements to become a developer.
Furthermore, the Ella Cafe developer must ensure that all monetary and other obligations to Ella Cafe, its affiliates, and third-party suppliers (including the landlord) are current and fully paid at the time of transfer. The developer must also be in full compliance with the Development Agreement and any other agreements with Ella Cafe, its affiliates, suppliers, and landlord. The developer must have developed and have in operation at least 50% of the Coffee Houses required under the Development Agreement at the time of the proposed transfer. The developer and each transferring owner must execute a general release of claims against Ella Cafe and its affiliates. Finally, the transferee must execute Ella Cafe's then-current form of Development Agreement, which may have materially different terms, including different fees and obligations.