What section of the Ella Cafe Franchise Agreement outlines the transfer requirements that the franchisee must comply with when there is a change in ownership?
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 transfer requirements that a franchisee must comply with when transferring ownership. This section stipulates that because Ella Cafe has relied on the franchisee's skills and character when granting the franchise, the franchisee cannot transfer the franchise without first providing Ella Cafe with at least 60 days' notice and obtaining their consent.
Ella Cafe may impose conditions when granting consent for a transfer. These conditions include receiving a $10,000 transfer fee, plus any broker fees and out-of-pocket costs incurred by Ella Cafe, including attorney's fees. The proposed new franchisee must also complete Ella Cafe's franchise application process, meet the then-current standards for new franchisees, and be approved by Ella Cafe. Additionally, the proposed new franchisee cannot be a competitor of Ella Cafe.
The proposed new franchisee 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 new franchisee must also provide a guaranty in accordance with Section 2.6 of the agreement. This ensures that Ella Cafe maintains control over who becomes a franchisee and that the new franchisee meets their standards and obligations.