What standards must a transferee meet to the Franchisor's satisfaction to become an Ella Cafe developer?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
vey, give away, pledge, mortgage, or otherwise dispose of or encumber any direct or indirect interest in this Agreement or in the Business Entity without the prior written consent of Franchisor. Franchisor will not unreasonably withhold its consent to a transfer, but may condition its consent on satisfaction of any or all of the following.
- 8.3.1. Developer has provided Franchisor the following at least 120 days prior to the proposed closing date of the proposed transfer: (a) written request for Franchisor's consent to the transfer; (b) payment of the non-refundable transfer fee in the amount set forth in the Key Terms, plus reimbursement of Franchisor's reasonable attorneys' fees; and (c) a copy of the proposed asset purchase/transfer agreements, including sale terms.
- 8.3.2. The transferee has demonstrated to Franchisor's satisfaction that the transferee meets Franchisor's then-current educational, managerial, and business standards; possesses a good moral character, business reputation, and credit rating; has the aptitude and ability to operate the Coffee House; and meets Franchisor's then-current financial requirements to become an Ella Café developer.
- 8.3.3. All of Developer's accrued monetary obligations and all other outstanding obligations to Franchisor, its Affiliates, and Developer's third-party suppliers (including Developer's landlord) are, or will be at the time of the transfer, current and fully paid and satisfied, and Developer must be in full compliance with this Agreement and any other agreement between Developer and its Affiliates and Franchisor and its Affiliates, Developer's suppliers, and Developer's landlord. Without limiting the foregoing, Developer must have developed, and it or its Affiliates must have in operation at the time of the proposed transfer, at least 50% of the Coffee Houses required to be developed under this Agreement.
- 8.3.4.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, if a developer seeks to transfer their rights, the transferee must meet several standards to the Franchisor's satisfaction. The transferee must meet Ella Cafe's then-current educational, managerial, and business standards. They must also possess a good moral character, business reputation, and credit rating. Furthermore, the transferee needs to demonstrate the aptitude and ability to operate the Coffee House and meet Ella Cafe's then-current financial requirements to become a developer.
In addition to meeting the above standards, all of the Developer's accrued monetary obligations and all other outstanding obligations to Ella Cafe, its Affiliates, and the Developer's third-party suppliers (including the Developer's landlord) must be current and fully paid and satisfied at the time of the transfer. The Developer must also be in full compliance with the Development Agreement and any other agreement between the Developer and its Affiliates, Ella Cafe and its Affiliates, the Developer's suppliers, and the Developer's landlord. The developer must have developed, and it or its Affiliates must have in operation at the time of the proposed transfer, at least 50% of the Coffee Houses required to be developed under the Development Agreement.
Furthermore, the transferee will need to execute Ella Cafe's then-current form of Development Agreement, which may have terms that are materially different from the original agreement, including different fees and obligations. The transferee must also comply with Ella Cafe's then-current initial training requirements. If the transferee is a Business Entity, each of the transferee's Owners must sign Ella Cafe's then-current form of personal guaranty.
These requirements ensure that any new developer stepping into an existing agreement is well-qualified, financially stable, and committed to upholding Ella Cafe's standards. Prospective franchisees should carefully consider these transfer requirements, as they could impact the future sale or transfer of their development rights.