How is the term of the new franchise agreement determined in an Extreme Art Studio franchise transfer?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
or indirect) in or perform services for a Competitive Business;
- (d) the transferee's representatives satisfactorily complete our then-current Initial Training Program;
- (e) the owner of the facility in which each Studio is located allows you to transfer the corresponding lease agreement to the transferee;
- (f) the transferee shall (if the transfer is of this Franchise Agreement), or you shall (if the transfer is of a controlling ownership interest in you or one of your owners), sign our then-current form of franchise agreement and related documents, (including, but not limited to, our then-current form of Owners Agreement) any and all of the provisions of which may differ materially from any and all of those contained in this Franchise Agreement, including the Royalty and the Marketing Fees; provided, however, that the term of the new franchise agreement signed will equal the remainder of the then-remaining term of this Franchise Agreement;
- (g) you pay us a transfer fee for each Extreme Art Studio Business to be transferred equal to $10,000 per
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, when a franchise agreement is transferred, the term of the new franchise agreement will be equal to the remaining term of the original franchise agreement. This means that the new franchisee who is taking over the business will only operate under the franchise agreement for the amount of time left on the original agreement, not a brand new ten-year term.
To complete the transfer, the transferee must meet several conditions. These include the transferee's representatives completing the Initial Training Program, securing the transfer of the lease agreement for the studio location, and signing the then-current form of the franchise agreement. The new agreement may have different provisions from the original, including royalty and marketing fees.
In addition to these conditions, the franchisee must pay Extreme Art Studio a transfer fee of $10,000 for each transferred Extreme Art Studio Business, plus any broker fees and training costs. A nonrefundable deposit of $1,000 per studio is required when requesting transfer approval, with the remaining balance due upon execution of the transfer documents. The transferring party must also sign a general release of claims against Extreme Art Studio. These stipulations ensure that Extreme Art Studio maintains control over who operates its franchises and that it is compensated for the transfer.