What is the Face Foundrie franchisor's right regarding assignment of contract?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section(s) in | Summary | |
|---|---|---|---|
| Area Development Agreement | rights or obligations under the Area Development Agreement, or any material asset of your business, without our prior written consent, which shall be subject to all of the conditions and requirements for transfers set forth in the Franchise Agreement executed simultaneously with the Area Development Agreement that we deem applicable to a proposed transfer under the Area Development Agreement. | ||
| (l) Franchisor approval | Section 7.2 | We have the right to approve transfers. | |
| of transfer by area | |||
| developer | |||
| (m) Conditions for franchisor’s approval of transfer | Sections 7.2 and 7.3 | Unless waived, a transfer of the Area Development Agreement is conditioned on, among other factors, the requirement that the proposed transfer of the Area Development Agreement be made in conjunction with a simultaneous transfer of all existing Franchise Agreements to the same approved transferee. Additionally, your first Facial Bar under your first Franchise Agreement must be open and operating. | |
| (n) Franchisor’s right of | Not Applicable | ||
| first refusal to acquire | |||
| area developer’s | |||
| business | |||
| (o) Franchisor’s option to | Not Applicable | ||
| purchase area | |||
| developer’s business | |||
| (p) Death or disability of area developer | Section 5.2 | In the event your Operating Partner dies or becomes incapacitated, you must designate a new Operating Partner that owns at least a 20% ownership interest in you, subject to our approval. | |
| (q) Non-competition covenants during the term of the franchise | Section 8.2 | No direct or indirect involvement in competitive business. | |
| (r) Non-competition covenants after the franchise is terminated or expires | Section 8.3 | For two years, no involvement in competitive business located within a 10-mile radius of any Facial Bar. | |
| Provision | Section(s) in Area Development Agreement | Summary | |
| (s) Modification of the agreement | Section 15 | Except for those permitted to be made unilaterally by us hereunder, no amendment, change, or variance from the Area Development Agreement will be binding on either party unless mutually agreed to by the parties and executed by their authorized officers or agents in writing. | |
| (t) Integration/merger clause | Section 15 | Only the terms of the Area Development Agreement and other related written agreements are binding (subject to applicable state law). Any representations or promises outside of the Disclosure Document and Area Development Agreement may not be enforceable. No claim made in any franchise agreement is intended to disclaim the representations made in this Franchise Disclosure Document. | |
| (u) Dispute resolution by | Sections 16.3 and 16.4 | Except for certain claims, all disputes must be | |
| arbitration or | mediated, and if not settled by mediation, are then | ||
| mediation | subject to arbitration. | ||
| (v) Choice of forum | Section 16.5 | Litigation must be held in the federal or state court for the district where our principal executive office is located (subject to state law). Mediation must occur in a metropolitan area within 20 miles of our principal executive office and arbitration must occur in the office of the American Arbitration Association closest to our principal executive office. | |
| (w) Choice of law | Section 16.1 | Minnesota law applies generally, provided that the Minnesota Franchise Act and other franchise- specific laws and regulations of the State of Minnesota generally do not apply to Facial Bars located outside of Minnesota. (Subject to applicable state law.) | |
| Provision | Section in Franchise Agreement | Summary the Facial Bar; and offer us the right to purchase the Facial Bar and/or assume interest in lease or sublease. | |
| j. | Assignment of contract by franchisor | Section 13.07 | No restriction on our right to assign. |
| k. | "Transfer" by franchisee – defined | Section 1.04 | Includes transfer of Franchise Agreement, any interest in Franchise Agreement, any assets of Facial Bar, the Facial Bar premises, or any equity interest in you if you are an entity or any equity interest in any owners of you if they are an entity. |
| l. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION OF THE FRANCHISE RELATIONSHIP (FDD pages 51–59)
What This Means (2025 FDD)
According to the 2025 Face Foundrie Franchise Disclosure Document, Face Foundrie has the right to assign the franchise agreement without any restrictions. This means Face Foundrie can transfer its rights and obligations under the agreement to another party without needing the franchisee's consent.
For a prospective franchisee, this clause provides Face Foundrie with significant flexibility. Face Foundrie could sell the entire franchise system, merge with another company, or transfer the agreement to a subsidiary or affiliate. While this might not directly impact the day-to-day operations of the franchise, it does mean the franchisee could be dealing with a completely different entity in the future.
In contrast, the franchisee's ability to transfer the agreement is subject to Face Foundrie's approval, which will not be unreasonably withheld. The franchisee also needs to meet certain conditions for the transfer to be approved. This difference highlights the power dynamic in the franchise relationship, where the franchisor retains considerable control over the agreement's transferability.
It is important for a potential Face Foundrie franchisee to understand this provision and consider the implications of potentially having to work with a new franchisor during the term of the agreement. While Face Foundrie is unlikely to assign the agreement to an unqualified party, the franchisee should be prepared for the possibility of a change in leadership and management.