What right does Extreme Art Studio Franchising, LLC waive in the Approval of Requested Assignment?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
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, Extreme Art Studio Franchising, LLC waives its right of first refusal as part of the approval process for a requested assignment of a franchise. This waiver is specifically related to the former franchise agreement when a franchisee desires to assign their franchised business to a new franchisee.
In practical terms, this means that if an existing Extreme Art Studio franchisee wants to sell or transfer their franchise to someone else, Extreme Art Studio Franchising, LLC gives up its option to step in and purchase the franchise itself before allowing the franchisee to sell to a third party. This benefits the franchisee by providing more flexibility in transferring their business.
However, this waiver is conditional. It only applies if the former franchisee pays the required transfer fee and all parties mutually execute the assignment agreement. This ensures that Extreme Art Studio Franchising, LLC still receives compensation for the transfer and maintains control over who becomes a new franchisee within their system. The new franchisee must also sign the current form of the franchise agreement.