What constitutes an assignment of the Flowerama Franchise Agreement if the franchisee is an individual?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
- c. Assignment to a Controlled Corporation or Limited Liability Company. If Franchisee is an individual, individuals or a partnership, Franchisor expressly consents to the assignment of this franchise to a corporation or limited liability company formed and controlled by Franchisee to operate the Franchised Unit; provided, however, that Franchisee shall be and remain, together with said corporation and its shareholders, or said limited liability company and its members, jointly and severally liable for all obligations under the Franchise Agreement and for all breaches thereof and, provided further, that Franchisee shall continue to supervise the operation of the Franchised Unit.
Franchisee shall immediately notify Franchisor of any such assignment and shall complete all appropriate agreements required by Franchisor as a result thereof.
No transfer fee shall be charged by Franchisor for its participation in this type of transfer; provided, however, that a transfer pursuant to this Section 8(c) may occur one (1) time only.
- d. Transfers Deemed to be Assignments.
If Franchisee is an individual, the transfer of any portion of Franchisee's interest in the Franchise Agreement will be deemed to be an assignment of the Franchise Agreement.
If the Franchise Agreement is assigned to a controlled corporation or limited liability company as provided in Section 8(c) above, the transfer from the original shareholders of the corporation or members of the limited liability company of any of the outstanding capital stock or voting power of such corporation or limited liability company will be deemed to be an assignment of the franchise.
If Franchisee is a partnership, or if the Franchise Agreement is assigned to a partnership, a transfer of the franchise will be deemed to have occurred when any of all partnership interests have been transferred to other than the original partners who entered into the Franchise Agreement or obtained an assignment of the franchise.
All transfers of ownership in a corporate franchisee and a partnership franchisee shall immediately be reported by Franchisee to Franchisor.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 72–77)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, if the franchisee is an individual, any transfer of any portion of the franchisee's interest in the Franchise Agreement is considered an assignment of the Franchise Agreement. This means that even a partial transfer of ownership or rights related to the franchise is treated as a full assignment requiring franchisor approval.
However, Flowerama expressly consents to the assignment of the franchise to a corporation or limited liability company formed and controlled by the franchisee to operate the Franchised Unit. In this case, the franchisee must remain jointly and severally liable for all obligations under the Franchise Agreement, along with the corporation and its shareholders or the limited liability company and its members. Additionally, the franchisee must continue to supervise the operation of the Franchised Unit.
The franchisee must immediately notify Flowerama of any such assignment and complete all appropriate agreements required by Flowerama. No transfer fee is charged for this type of transfer, but it can only occur one time. If the Franchise Agreement is assigned to a controlled corporation or limited liability company, the transfer from the original shareholders of the corporation or members of the limited liability company of any of the outstanding capital stock or voting power of such corporation or limited liability company will be deemed to be an assignment of the franchise.
All transfers of ownership in a corporate franchisee and a partnership franchisee shall immediately be reported by Franchisee to Franchisor.