Can Face Foundrie impose restrictions on the transfer of a franchise?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
applicable audit period of two percent (2%) or more, or if the audit is required because Franchisee failed to comply with Franchisor's reporting requirements, then Franchisee shall pay or reimburse Franchisor for any and all reasonable expenses incurred by Franchisor in connection with the inspection, including, but not limited to, attorneys' and accounting fees, travel expenses, room and board and compensation of Franchisor's employees.
13. TRANSFER OF INTEREST.
13.01 Franchisor's Approval. The rights and duties created by this Agreement are personal to Franchisee or, if Franchisee is an Entity, its Owners. Accordingly, neither Franchisee nor any of its Owners may Transfer the Facial Bar, the Premises, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Facial Bar, the Premises, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior written consent of Franchisor. In addition, if Franchisee is an Entity, its Owners may not Transfer their equity interests in such Entity, without the prior written consent of Franchisor. Furthermore, in the event that any Owner is an Entity, the interests of the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, in such Owner, may not be Transferred, without the prior written consent of Franchisor. Franchisor will not unreasonably withhold consent to a Transfer provided the requirements of Section 13.02 have been satisfied. Any Transfer in violation of this Section shall be void and of no force and effect.
13.02 Conditions for Approval. If Franchisor has not exercised its right of first refusal under Section 13.05, Franchisor will not unreasonably withhold its approval of a Transfer that meets all of the reasonable restrictions, requirements and conditions Franchisor may impose on the Transfer, the transferor(s) and/or the transferee(s), including the following:
(a) Franchisee and its Owners and Affiliates must be in compliance with the provisions of this Agreement and all other agreements with Franchisor or any of its Affiliates and have paid all outstanding amounts owed thereto, as well as to the approved suppliers to the System;
(b) The transferee shall demonstrate to Franchisor's satisfaction that the terms of the proposed transfer do not place an unreasonable financial or operational burden on the transferee, and that the transferee (or, if the transferee is other than an individual, such owners of beneficial interests in the transferee as Franchisor may request) meets Franchisor's then-current application qualifications (which may include educational, managerial, socially responsible, and business standards, good moral character, business reputation, and credit rating); has the aptitude and ability to operate the Facial Bar and absence of conflicting interests; and has adequate financial resources and capital to operate the Facial Bar;
(c) The proposed transferee must enter into an agreement in writing to assume and perform all of Franchisee's duties and obligations hereunder and/or, as required by Franchisor, execute the form of franchise agreement then being offered to new System franchisees, and such other ancillary agreements required by Franchisor for the Facial Bar franchised hereunder, which agreements shall supersede this Agreement and its ancillary documents in all respects, and the terms of which may differ from the terms of this Agreement including, without limitation, higher and/or additional fees;
(d) The transferee (and, if the transferee is not an individual, the Operating Partner), shall, at the transferee's expense, successfully attend and successfully complete any training programs then in effect for operators upon such terms and conditions as Franchisor may reasonably require;
(e) Franchisee or the proposed transferee must pay Franchisor a transfer fee equal to the greater of (i) Ten Thousand Do
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, Face Foundrie places several restrictions on the transfer of a franchise. The franchisee needs prior written consent from Face Foundrie to transfer the Facial Bar, the premises, the Franchise Agreement, or any associated rights or obligations. This requirement extends to transfers occurring by operation of law or any other means. If the franchisee is an entity, the owners also need prior written consent from Face Foundrie to transfer their equity interests. Furthermore, if an owner is an entity, the interests of its equity holders cannot be transferred without Face Foundrie's prior written consent. Face Foundrie states that it will not unreasonably withhold consent if the conditions in Section 13.02 of the agreement are met. Any transfer that violates these conditions will be considered void.
Face Foundrie outlines specific conditions that must be met for a transfer to be approved, assuming Face Foundrie has not already exercised its right of first refusal. These conditions include ensuring that the franchisee, its owners, and affiliates are in full compliance with the Franchise Agreement and all other agreements with Face Foundrie or its affiliates. All outstanding amounts owed to Face Foundrie, its affiliates, and approved suppliers must be paid. The proposed transferee must also demonstrate that the terms of the transfer do not create an unreasonable financial or operational burden and must meet Face Foundrie's then-current application qualifications. These qualifications may include standards related to education, management, social responsibility, business acumen, moral character, business reputation, and credit rating.
Additional conditions for transfer approval by Face Foundrie include the transferee's aptitude and ability to operate the Facial Bar, the absence of conflicting interests, and the possession of adequate financial resources and capital. The transferee must also enter into a written agreement to assume all of the franchisee's duties and obligations, potentially including executing the then-current form of franchise agreement offered to new franchisees. This new agreement may supersede the original and contain different terms, including higher or additional fees. The transferee, or the operating partner if the transferee is not an individual, must successfully complete any required training programs at their own expense.
Furthermore, Face Foundrie requires that the franchisee or the proposed transferee pay a transfer fee equal to the greater of $10,000 or reimbursement for all legal, accounting, training, and other expenses incurred by Face Foundrie in connection with the transfer. Finally, the franchisee, its owners, and affiliates must execute a general release of any and all claims against Face Foundrie and its affiliates, stockholders, officers, directors, employees, agents, successors, and assigns, unless such a release is limited or prohibited by applicable law. These comprehensive restrictions ensure Face Foundrie maintains control over who operates a Face Foundrie franchise and that the brand's standards are upheld.