What is the 'Requested Assignment' referring to in the Extreme Art Studio agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
This Approval of Requested Assignment ("Agreement") is entered into this day of , 20, between Extreme Art Studio Franchising, LLC ("Franchisor"), a Minnesota limited liability company ("Former Franchisee"), the undersigned owners of Former Franchisee ("Owners") and , a [State] [Corporation/Limited Liability Company] ("New Franchisee"). RECITALS WHEREAS, Franchisor and Former Franchisee entered into that certain franchise agreement dated , 20 ("Former Franchise Agreement"), in which Franchisor granted Former Franchisee the right to operate an Extreme Art franchise located at ("Franchised Business"); and WHEREAS, Former Franchisee desires to assign ("Requested Assignment") the Franchised Business to New Franchisee, New Franchisee desires to accept the Requested Assignment of the Franchised Business from Former Franchisee, and Franchisor desires to approve the Requested Assignment of the Franchised Business from Former Franchisee to New Franchisee upon the terms and conditions contained in this Agreement, including that New Franchisee sign Franchisor's current form of franchise agreement together with all exhibits and attachments thereto ("New Franchise Agreement") contemporaneously herewith. NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements herein contained, the parties hereto hereby covenant, promise, and agree as follows: 1. Payment of Fees. In consideration for the Requested Assignment, Former Franchisee acknowledges and agrees to pay Franchisor the Transfer Fee, as required under the Franchise Agreement ("Franchisor's Assignment Fee"). 3. Consent to Requested Assignment of Franchised Business. Franchisor hereby consents to the Requested Assignment of the Franchised Business from Former Franchisee to New Franchisee upon receipt of the Franchisor's Assignment Fee from Former Franchisee and the mutual execution of this Agreement by all parties. Franchisor waives its right of first refusal set forth in the Former Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the 'Requested Assignment' refers to the instance where a former franchisee wants to transfer their franchised business to a new franchisee. This process requires the franchisor's approval, as outlined in the sample Approval of Requested Assignment agreement.
The agreement details the conditions under which Extreme Art Studio Franchising, LLC will approve the transfer. This includes the new franchisee signing the current franchise agreement and the former franchisee paying the transfer fee. The franchisor also waives its right of first refusal, allowing the assignment to proceed directly to the new franchisee.
This process is important for prospective franchisees to understand because it outlines the steps and costs involved if they ever decide to sell their Extreme Art Studio franchise. It ensures that the transfer is conducted in accordance with the franchisor's standards and that all parties are aware of their obligations.
The agreement also highlights the franchisor's role in approving the assignment, ensuring that the new franchisee meets the necessary qualifications and that the transfer aligns with the overall interests of the Extreme Art Studio franchise system.