Does Ella Cafe grant rights under the agreement in reliance on the personal character of the developer?
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, the agreement is based on the developer's personal character. Ella Cafe grants rights to developers in reliance on their business skill, financial capacity, and personal character, as well as the character of their owners. This means that Ella Cafe carefully considers who they are partnering with to ensure they are capable of upholding the brand's standards and reputation.
Because of this reliance, Ella Cafe requires prior written consent before a developer or any owner can sell, assign, transfer, or otherwise dispose of any interest in the agreement or the business entity. This provision allows Ella Cafe to maintain control over who is involved in the franchise and to ensure that any new party meets their standards.
Ella Cafe may condition its consent to a transfer on the satisfaction of certain requirements. These requirements include the developer providing a written request for consent, paying a non-refundable transfer fee (the amount of which is set forth in the Key Terms), reimbursing Ella Cafe's attorney fees, and providing a copy of the proposed asset purchase/transfer agreements at least 120 days before the proposed closing date. The transferee must also demonstrate that they meet Ella Cafe's then-current educational, managerial, and business standards, possess 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.