What is the required action for an Ella Cafe franchisee who wants to transfer their franchise?
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, a franchisee cannot transfer their franchise without first providing the franchisor with at least 60 days' prior notice and obtaining their consent. Ella Cafe emphasizes that the franchise agreement is based on the franchisee's business skills, financial capacity, personal character, experience, and business ability.
To gain consent for a transfer, Ella Cafe may impose several conditions. These include receiving a $10,000 transfer fee, plus any broker fees and out-of-pocket costs, including attorney's fees, incurred by Ella Cafe. The proposed assignee must complete Ella Cafe's franchise application process, meet the then-current standards for new franchisees, and be approved by Ella Cafe. The assignee must not be a competitor of Ella Cafe.
Furthermore, the proposed assignee must execute Ella Cafe's current form of franchise agreement and any related documents, which may contain materially different provisions than the original agreement. All owners of the proposed assignee must also provide a guaranty. These stipulations ensure that any new franchisee meets Ella Cafe's standards and is bound by the current terms and conditions of the franchise agreement.