What monetary obligations must an Ella Cafe developer satisfy before transferring the franchise?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
st 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.
- 8.3.3. All of Developer's accrued monetary obligations and all other outstanding obligations to Franchisor, its Affiliates, and Developer's third-party suppliers (including Developer's landlord) are, or will be at the time of the transfer, current and fully paid and satisfied, and Developer must be in full compliance with this Agreement and any other agreement between Developer and its Affiliates and Franchisor and its Affiliates, Developer's suppliers, and Developer's landlord. Without limiting the foregoing, Developer must have developed, and it or its Affiliates must have in operation at the time of the proposed transfer, at least 50% of the Coffee Houses required to be developed under this Agreement.
- 8.3.4.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, a developer looking to transfer their interest in the Development Agreement must meet specific financial obligations. Before a transfer can occur, the developer must ensure that all accrued monetary obligations to Ella Cafe, its affiliates, and the developer's third-party suppliers, including landlords, are current, fully paid, and satisfied. The developer must also be in full compliance with the Development Agreement and any other agreements with Ella Cafe, its affiliates, suppliers, and landlords.
In addition to settling outstanding debts, the developer is required to pay a non-refundable transfer fee, the amount of which is detailed in the Key Terms of the Franchise Agreement. The developer must also cover Ella Cafe's reasonable attorney's fees incurred during the transfer process. These fees are associated with documenting the transfer and ensuring that all legal requirements are met.
Furthermore, the developer must ensure that neither they nor their affiliates are in default of any monetary obligations owed to Ella Cafe, its affiliates, landlords, or other vendors related to any Ella Cafe location they operate. This requirement extends to the 12 months preceding the request for financial approval of the transfer, ensuring a consistent record of financial responsibility. These conditions collectively aim to protect Ella Cafe's interests by ensuring that any transfer of development rights occurs with financially stable and compliant parties.