What must be true of the transferee for Extreme Art Studio to approve a transfer of the franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
ents; and have not violated any provision of this Franchise Agreement or any other agreement with us or our affiliates;
- (c) neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest (direct 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 Extreme Art Studio Business, and the cost of any applicable broker fees and any training required. You will pay us a nonrefundable deposit of $1,000 per Extreme Art Studio Business when you request approval of a transfer and pay, in certain funds, the remaining amount when you execute the transfer documents;
- (h) you (and your transferring owners) sign a general release, in a form satisfactory to us, of any and all known or unknown claims against us, our affiliates and subsidiaries, and their respective shareholders, members, officers, directors, employees, and agents arising before or contemporaneously with the transfer;
- (i) all individuals and entities who will be direct or indirect owners must execute or have executed a guarantee in the form we prescribe;
- (j) we have determined that the purchase price and payment terms will not adversely affect the transferee's operation of the Franchised Business;
- (k) if you or your owners finance any part of the purchase price, you and/or your owners agree that all of the transferee's obl
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, several conditions must be met for the franchisor to approve a franchise transfer. The transferee's representatives must satisfactorily complete Extreme Art Studio's then-current Initial Training Program. Additionally, the owner of the facility where the studio is located must allow the transfer of the lease agreement to the transferee. The purchase price and payment terms must not adversely affect the transferee's operation of the franchised business.
Furthermore, if the transfer involves the Franchise Agreement itself, the transferee must sign Extreme Art Studio's then-current form of franchise agreement and related documents, which may differ materially from the original agreement, including royalty and marketing fees. However, the term of the new franchise agreement will equal the remainder of the original agreement's term. All individuals and entities who will be direct or indirect owners must execute a guarantee in the form prescribed by Extreme Art Studio.
In addition to these conditions, the transferring franchisee must pay Extreme Art Studio a transfer fee of $10,000 per Extreme Art Studio Business, plus the cost of any applicable broker fees and required training. A nonrefundable deposit of $1,000 per Extreme Art Studio Business is due when requesting transfer approval, with the remaining amount due upon execution of the transfer documents. The transferring franchisee must also sign a general release of any claims against Extreme Art Studio and its affiliates. If the franchisee or its owners finance any part of the purchase price, the transferee's obligations must be subordinate to their obligations to pay royalties, marketing fees, and other amounts due to Extreme Art Studio and its vendors.
These stipulations ensure that the transferee is adequately trained, financially stable, and committed to adhering to Extreme Art Studio's standards and obligations. They also protect Extreme Art Studio's interests by securing necessary releases and ensuring continued financial obligations are met. Prospective franchisees should carefully consider these requirements and associated costs when planning for a potential transfer.