Is there a transfer fee required when transferring an Engineering For Kids franchise?
Engineering_For_Kids Franchise · 2025 FDDAnswer from 2025 FDD Document
buyer(s) must cooperate with us in this regard, including to cooperate with us in obtaining the information that we need in order to review and consider the qualifications of a prospective transferee and to provide us with a copy of the purchase agreement with the buyer.
14.4. Transfer Fee
For a proposed Transfer of the Franchised Business or this Agreement (or, if you are a corporation or other entity, a Transfer of ownership interests that would result in a change of control of your entity), you must pay to us a Transfer fee in the amount of Five Thousand Dollars ($5,000), unless the Transfer qualifies for the reduced fee for a partial interest Transfer under Section 14.5 below.
14.5. Transfer of Partial Ownership Interest
For any proposal to admit a new Owner, to remove an existing Owner, or to change the distribution of ownership shown on the cover page, or for any other transaction that amounts to the Transfer of a partial interest in the Franchised Business, and provided that all such changes would not result in a change of control of your entity, you must give us advance notice and submit a copy of all proposed contracts and other information concerning the Transfer that we may request. Provided that you provide us with all information and documents that we request in connection with the partial Transfer under this Section 14.5, we will reduce the transfer fee payable to us to One Thousand Four Hundred Dollars ($1,400). We will have a reasonable time (not less than thirty (30) days) after we have received all requested information to evaluate the proposed Transfer. You must satisfy the conditions in Sections 14.3.2(a), 14.3.3, 14.3.4, 14.3.5, and 8.4 above in connection with any such Transfer. We may withhold our consent on any reasonable grounds or give our consent subject to reasonable conditions. You acknowledge that any proposed new owner must submit a personal application and execute a personal guarantee in the same form signed by the original Owners.
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Source: Item 23 — RECEIPTS (FDD pages 53–138)
What This Means (2025 FDD)
According to Engineering For Kids' 2025 Franchise Disclosure Document, the standard transfer of a franchise requires the transferee to meet several conditions. These include demonstrating that they meet the current qualifications for a franchisee, signing the current franchise agreement, completing the training requirements and paying the associated training fee, and modernizing the franchised business to meet current standards. However, the document specifies some instances where a transfer fee is either reduced or not imposed.
Specifically, if a franchisee seeks to transfer a partial ownership interest but not a change of control, the transfer fee is reduced to $1,400, provided the franchisee supplies all requested information and meets certain conditions outlined in the FDD. These conditions include those in sections 14.3.2(a), 14.3.3, 14.3.4, 14.3.5, and 8.4. The franchisor retains the right to withhold consent on reasonable grounds or grant consent subject to conditions, and any new owner must submit a personal application and guarantee.
Furthermore, Engineering For Kids will not impose a transfer fee if the franchise agreement is assigned to a corporation, partnership, or limited liability corporation formed for ownership convenience, provided that the entity's sole business is operating an Engineering For Kids Business. The original owners must maintain the same equity interests in the new entity, and the franchisee must reimburse Engineering For Kids for any out-of-pocket expenses incurred during the review and documentation of the transfer. This provides some flexibility for franchisees looking to change their business structure without incurring additional fees, as long as they meet the specified conditions.