What section of the Ella Cafe franchise agreement discusses permitted transfers?
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, Section 15.2 of the franchise agreement outlines the stipulations regarding transfers by the franchisee. This section emphasizes that the agreement is personal to the franchisee, and Ella Cafe relies on the franchisee's skills and character.
Therefore, a franchisee cannot transfer their rights without first providing Ella Cafe with at least 60 days' notice and obtaining their consent. Ella Cafe may impose conditions on this consent.
These conditions include a transfer fee of $10,000, plus any broker fees and out-of-pocket costs incurred by Ella Cafe, including attorney's fees. The proposed assignee must also complete Ella Cafe's franchise application process, meet the standards for new franchisees, and not be a competitor. Additionally, the assignee must execute Ella Cafe's current franchise agreement, which may contain different provisions, and all owners of the proposed assignee must provide a guaranty.