What is the required notice period for an Ella Cafe franchisee to provide before a proposed transfer?
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 must provide the franchisor with at least 60 days prior notice before any proposed transfer of the franchise. This requirement ensures that Ella Cafe has ample time to assess the proposed transfer and the potential transferee.
This advance notice allows Ella Cafe to evaluate the prospective buyer's qualifications, ensuring they meet the brand's standards for new franchisees. These standards include completing the franchise application process, meeting the franchisor's criteria, and gaining approval as a franchisee. The franchisor also uses this time to protect its interests by ensuring the proposed buyer is not a competitor and that they are willing to execute the current franchise agreement, which may contain different provisions.
Furthermore, Ella Cafe may impose conditions on the transfer, such as requiring a $10,000 transfer fee plus any broker and legal fees. This fee compensates the franchisor for the administrative and legal costs associated with the transfer process. The 60-day notice period is crucial for franchisees planning to sell their business, as it allows them to comply with the franchisor's requirements and facilitate a smooth transfer process.