Must the proposed assignee meet Ella Cafe's standards for new franchisees?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
rks, the System, and/or the loss of association with or identification of Ella Coffee Company, LLC as the franchisor under this Agreement. Franchisor's assignment or transfer of its rights and obligations under this Agreement pursuant to this Section 15.1. to any party may be without Franchisee's approval or prior notice to Franchisee, provided that the buyer, assignee or transferee agrees in writing to assume all of Franchisor's obligations under this Agreement. Franchisor and its Indemnitees will not be liable for obligations of the transferee arising after the date of transfer.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Franchisor entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Franchisor at least 60 days prior notice of the proposed Transfer, and without obtaining Franchisor' consent. In granting any such consent, Franchisor may impose conditions, including, without limitation, the following:
- (i) Franchisor receives a transfer fee of $10,000 ("Transfer Fee") plus any broker fees and other out-of-pocket costs incurred by Franchisor, including attorneys' fees
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if a franchisee wants to transfer their franchise to someone else, the proposed assignee must meet Ella Cafe's standards for new franchisees. Specifically, the assignee must complete Ella Cafe's franchise application processes and be approved by Ella Cafe as a franchisee. This requirement ensures that any new operator of an Ella Cafe franchise meets the brand's standards for business skill, financial capacity, and overall suitability.
In addition to meeting the standards for new franchisees, the proposed assignee must not be a competitor of Ella Cafe. The assignee will also need to execute Ella Cafe's then-current form of franchise agreement, which may contain materially different provisions than the original agreement. All owners of the proposed assignee must provide a guaranty, ensuring they are personally liable for the franchise's obligations.
Furthermore, the franchisee must provide Ella Cafe with at least 60 days' notice of the proposed transfer and obtain Ella Cafe's consent. As part of the transfer, Ella Cafe requires a transfer fee of $10,000, plus any broker fees and other out-of-pocket costs incurred by Ella Cafe, including attorneys' fees. These conditions ensure that Ella Cafe maintains control over who operates its franchises and that the brand's standards are upheld, protecting the overall integrity and reputation of the Ella Cafe system.