Does Ella Cafe require a proposed assignee to complete a franchise application process?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
e'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, a proposed assignee must complete Ella Cafe's franchise application process. Specifically, if a franchisee wants to transfer their franchise to someone else, that proposed assignee and their owners must complete the then-current franchise application process. They also must meet Ella Cafe's standards for new franchisees at that time and be approved by Ella Cafe as a franchisee.
This requirement ensures that any new operator meets Ella Cafe's standards for franchisees. This protects the brand and the existing franchisees by ensuring that new operators are qualified and capable.
In addition to completing the application process, the proposed assignee must not be a competitor and must execute Ella Cafe's current form of franchise agreement, which may contain materially different provisions than the original agreement. All owners of the proposed assignee must also provide a guaranty. The franchisee must also pay a transfer fee of $10,000, plus any broker fees and other out-of-pocket costs incurred by Ella Cafe, including attorneys' fees.