What exceptions exist to Ella Cafe's right of first refusal regarding franchise transfers?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
rks, the System, and/or the loss of association with or identification of Ella Coffee Company, LLC as the franchisor under this Agreement. Franchisor's assignment or transfer of its rights and obligations under this Agreement pursuant to this Section 15.1. to any party may be without Franchisee'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)
Based on the 2024 Ella Cafe Franchise Disclosure Document, a franchisee cannot conduct or undergo a transfer without providing Ella Cafe at least 60 days prior notice and obtaining their consent. Ella Cafe may impose conditions when granting consent for a transfer. These conditions include receiving a transfer fee of $10,000, plus any broker fees and out-of-pocket costs, including attorney's fees.
Additional conditions that Ella Cafe may impose include ensuring the proposed assignee and their owners complete Ella Cafe's franchise application processes, meet the then-applicable standards for new franchisees, and are approved by Ella Cafe as franchisees. The proposed assignee must not be a competitor.
Furthermore, the proposed assignee must execute Ella Cafe's then-current form of franchise agreement and any related documents, which may contain materially different provisions than the current agreement. All owners of the proposed assignee must provide a guaranty. These stipulations ensure that Ella Cafe maintains control over who becomes a franchisee and that the new franchisee meets their standards and obligations.