Are Extreme Art Studio Owners released from their obligations if the Franchisee's obligations are invalid?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
the liability of Owners or the ability of us to enforce this Franchise Owner Agreement or the obligations; (viii) any right of offset, counterclaim or defense of any Owner, including, without limitation, those which have been waived by Owners pursuant to this Franchise Owners Agreement; or (ix) the expiration, termination or assignment of the Franchise Agreement or any other agreement between you or Franchisee and us or our affiliates.
- 5. Transfers. Owners acknowledge and agree that we have granted the Franchise Agreement to Franchisee in reliance on Owners' business experience, skill, financial resources and personal character. Accordingly, Owners agree: (a) not to sell, encumber, assign, transfer, convey, pledge, merge or give away any direct or indirect interest in this Franchisee, unless Owners first comply with the sections in the Franchise Agreement regarding transfers and assignment, and (b) that any attempt to do so will be a breach of this Owners Agreement and the Franchise Agreement. We may, from time to time, without notice to Owners, assign or transfer any or all of Owners' rights, duties and obligations or any interest therein in this Owners Agreement and, notwithstanding any assignment(s) or transfer(s), the rights, duties and obligations shall be and remain for the purpose of this Owners Agreement. Each and every immediate and successive assignee or transferee of any of the rights, duties or obligations of any interest therein shall, to the extent of such party's interest in the rights duties and/or obligations, be entitled to the benefits of this Owners Agreement to the same extent as if such assignee or transferee were us.
6. Notices.
- (a) Method of Notice. Any notices given under this Owners Agreement shall be in writing and delivered in accordance with the provisions of the Franchise Agreement.
- (b) Notice Addresses. Our current address for all communications under this Owners Agreement is:
Extreme Art Studio Franchising, LLC 7566 Market Place Drive Eden Prairie, MN 55344
The current address of each Owner for all communications under this Owners Agreement is designated on the signature page of this Owners Agreement. Any party may designate a new address for notices by giving written notice to the other parties of the new address according to the method set forth in the Franchise Agreement.
7. Enforcement of This Owners Agreement.
- (a) Dispute Resolution. Any claim or dispute arising out of or relating to this Owners Agreement shall be subject to the dispute resolution provisions of the Franchise Agreement. This agreement to engage in such dispute resolution process shall survive the termination or expiration of this Owners Agreement.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the obligations of Extreme Art Studio owners are tied to the Franchise Agreement. Specifically, owners acknowledge that the franchise grant is made in reliance on their business experience, skills, financial resources, and personal character. Owners are restricted from transferring any interest in the franchise without complying with transfer and assignment sections outlined in the Franchise Agreement. Any attempt to do so constitutes a breach of the Owners Agreement and the Franchise Agreement itself.
Extreme Art Studio retains the right to assign or transfer its rights, duties, and obligations under the Owners Agreement without notifying the owners. This means that even if the company assigns its obligations, the owners' obligations remain in effect. Furthermore, any assignee or transferee of Extreme Art Studio's rights is entitled to the benefits of the Owners Agreement, reinforcing the continuity of the owners' responsibilities.
Upon termination or expiration of the Franchise Agreement, certain obligations of both the franchisee and the owners continue. These include non-compete covenants, which prevent owners from engaging in competitive businesses within a specified radius of an Extreme Art Studio location for a defined period. These continuing obligations highlight that the owners' responsibilities extend beyond the active term of the franchise, ensuring ongoing compliance and protection of Extreme Art Studio's interests, regardless of the validity of the franchisee's obligations.