Under what conditions will Face Foundrie not unreasonably withhold consent to a transfer?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
wise 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 Dollars ($10,000), or (ii) reimbursement for all legal, accounting, training and other expenses incurred by Franchisor in connection with the Transfer;
(f) Franchisee and its Owners and Affiliates must, except to the extent limited or prohibited by applicable law, execute a general release, in form and substance satisfactory to Franchisor, of any and all claims against Franchisor and its Affiliates, stockholders, officers, directors, employees, agents, successors and assigns;
(g) The transferee of an Owner shall be designated as an Owner and each transferee who is designated an Owner shall enter into a written agreement, in a form satisfactory to Franchisor, agreeing to be bound as an Owner under the terms of this Agreement as long as such person or entity owns any interest in Franchisee. Additionally, the transferee and/or such owners of the transferee as Franchisor may request shall guarantee the performance of the transferee's obligations in writing in a form satisfactory to Franchisor;
(h) If Franchisee (or any of its Owners or Affiliates) finances any part of the sale price of the transferred interest, Franchisee and/or such Owners or Affiliates must agree that all obligations of the transferee, and security interests reserved by any of them in the assets transferred, will be subordinate to the transferee's obligations to pay all amounts due Franchisor and its Affiliates; and
(i) If so requested by Franchisor, Franchisee, at its expense, shall upgrade the Facial Bar and all equipment of the Facial Bar to conform to the then-current standards, specifications and requirements of new Face Foundrié Facial Bars then being established in the System, and shall complete the upgrading and other requirements within the time specified by Franchisor;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, Face Foundrie will not unreasonably withhold consent to a transfer of the Facial Bar, Premises, or the Franchise Agreement if the requirements of Section 13.02 of the agreement have been satisfied. These conditions include ensuring that the franchisee, its owners, and affiliates are in compliance with all agreements with Face Foundrie and have paid all outstanding amounts owed to them, as well as to approved suppliers.
Additionally, the proposed transfer must not place an unreasonable financial or operational burden on the transferee. The transferee must meet Face Foundrie's then-current application qualifications, including educational, managerial, socially responsible, and business standards, good moral character, business reputation, and credit rating. The transferee should also demonstrate the aptitude and ability to operate the Facial Bar, have no conflicting interests, and possess adequate financial resources and capital.
The transferee must also enter into a written agreement to assume all of the franchisee's duties and obligations or execute the form of franchise agreement then being offered to new franchisees, which may supersede the original agreement and have different terms, including higher fees. The transferee, or the operating partner if the transferee is not an individual, must successfully complete any required training programs. Furthermore, the franchisee or transferee must pay a transfer fee equal to the greater of $10,000 or reimbursement for all expenses incurred by Face Foundrie in connection with the transfer. The franchisee, its owners, and affiliates must execute a general release of claims against Face Foundrie, and the transferee of an owner must agree to be bound as an owner under the terms of the agreement.
Moreover, if the franchisee finances any part of the sale price, those obligations must be subordinate to the transferee's obligations to Face Foundrie. If requested by Face Foundrie, the franchisee must upgrade the Facial Bar to current standards. Finally, the transferor remains liable for all obligations to Face Foundrie that arose before the transfer and must execute any instruments requested to evidence this liability. These conditions ensure that the transfer maintains the standards and financial stability of the Face Foundrie franchise system.