When transferring an Ella Cafe Development Agreement, can negotiated terms, such as the Development Fee and initial franchise fees, be transferred to the transferee?

According to Ella Cafe's 2024 Franchise Disclosure Document, negotiated terms within the Development Agreement, such as the Development Fee and initial franchise fees, are not transferable to a new transferee. This means that if a developer sells their rights to develop Ella Cafe locations to another party, the new developer will not inherit any special deals or discounts on fees that the original developer may have secured.

This provision ensures that Ella Cafe maintains control over its revenue streams and can offer standardized terms to all new developers, regardless of any prior agreements. It also protects Ella Cafe from being bound by potentially unfavorable terms negotiated by a previous developer.

For a prospective Ella Cafe franchisee, this means that when considering purchasing an existing development agreement, they should be aware that they will likely need to negotiate new terms with Ella Cafe regarding fees. The transferee will execute Ella Cafe's then-current form of Development Agreement, which may include a different initial franchise fee, a different percentage royalty fee, and different advertising obligations.