Can an individual Ella Cafe developer transfer their interest to a business entity?
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, an individual developer can transfer their interest in the Development Agreement to a business entity under specific conditions. This transfer is allowed for operational convenience, provided Ella Cafe's form of assignment and assumption agreement is signed.
Several stipulations must be met for the transfer to be valid. First, the business entity must be formed solely for developing and operating Ella Cafe locations. The developer must provide Ella Cafe with copies of the entity's formation and governing documents, along with a certificate of good standing. The developer and their affiliates must be in compliance with all agreements with Ella Cafe and its affiliates. Additionally, the developer is responsible for covering Ella Cafe's legal fees associated with documenting the transfer and must execute a general release of claims against Ella Cafe.
It is important to note that this transfer option is specifically for individual developers looking to operate under a business entity. The FDD outlines additional requirements and considerations for other types of transfers, such as those involving existing owners or broader changes in ownership. Any transfer made without Ella Cafe's prior written consent is considered void and a breach of the Development Agreement.