If transferring my Ella Cafe franchise to a business entity, is there a fee I must pay?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.2. Transfer by Individual Developer to Business Entity for Convenience. If Developer is an individual or individuals, Developer may transfer its interest in this Agreement to a Business Entity for convenience of operation by signing Franchisor's form of assignment and assumption agreement if: (a) the Business Entity is formed solely for purposes of developing and/or operating Coffee Houses; (b) Developer provides Franchisor a copy of the Business Entity's formation and governing documents and a certificate of good standing from the jurisdiction under which the Business Entity was formed; (c) Developer 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.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if you, as an individual developer, wish to transfer your interest in the Development Agreement to a business entity for operational convenience, you are required to pay a fee. This transfer is permissible if the business entity is formed solely for developing and/or operating Ella Cafe Coffee Houses. Additionally, you must provide Ella Cafe with a copy of the business entity's formation and governing documents, along with a certificate of good standing from the relevant jurisdiction.
To proceed with the transfer, you and your affiliates must be in full compliance with the Development Agreement and all other agreements with Ella Cafe or its affiliates. The transfer is contingent upon you signing Ella Cafe's form of assignment and assumption agreement and paying Ella Cafe its reasonable attorney's fees incurred to document the transfer. Furthermore, you must execute a general release of any and all claims against Ella Cafe and its affiliates.
This process ensures that Ella Cafe maintains control over who operates its franchises and that all legal and financial obligations are met before a transfer occurs. It is important to note that any transfer requires Ella Cafe's prior written consent, and failure to obtain this consent renders the transfer void and a material breach of the Development Agreement.