What happens if the Principal Executive of the Ella Cafe franchise dies or becomes incapacitated?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
If the Principal Executive dies, becomes incapacitated, transfers his/her
interest in Franchisee, or otherwise ceases to be the executive primarily responsible for the Business, Franchisee shall promptly designate a new Principal Executive, subject to Franchisor reasonable approval.
- 2.6 Guaranty. If Franchisee is an entity, then Franchisee shall have each Owner sign a personal guaranty of Franchisee's obligations to Franchisor, in the form of Attachment 3.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if the Principal Executive dies, becomes incapacitated, transfers their interest in the franchise, or otherwise ceases to be the executive primarily responsible for the business, the franchisee must promptly designate a new Principal Executive, subject to Ella Cafe's reasonable approval.
This stipulation is important because the Principal Executive plays a key role in the Ella Cafe franchise. They are defined as the executive primarily responsible for the business and must have decision-making authority on behalf of the franchisee, as well as at least 10% ownership interest in the franchise. While the Principal Executive doesn't have to be the day-to-day general manager, they must devote substantial time and attention to the business.
Furthermore, Ella Cafe has the right to terminate the Franchise Agreement if an approved transfer, as required by Section 15, is not completed within the designated timeframe following a permanent disability. This underscores the importance of having a plan in place to address such a situation to avoid potential termination of the franchise agreement.