What events are considered an 'Asset Transfer' under the Jersey Mikes franchise agreement?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
ch case, without Franchisor's prior written consent. Any Transfer or attempted Transfer lacking Franchisor's prior written consent or that otherwise violates the restrictions in this Section 8 shall be ineffective against Franchisor and, without limiting Franchisor's remedies, shall constitute a default under Section 8.
- 8.2 Conditions to Voluntary Transfer of Rights. Neither Developer nor any Principal (defined in Section 20) shall effectuate an Asset Transfer (defined in Section 20) before the first Franchised Restaurant granted according to this Agreement opens for business. Developer or its Principals only may Transfer its rights under this Development Agreement or in the Developer itself, if it also assigns to the transferee all of its interests under each Franchise Agreement entered into according to this Agreement. Any Asset Transfer shall be subject to Franchisor's prior written consent, in its sole and absolute discretion. Franchisor may condition its consent on compliance with certain requirements, including, without limitation, any of the following (which Developer agrees are reasonable):
- (a) At the time of Asset Transfer, Developer and its Affiliates is in full compliance with Developer's obligations under this Agreement and all other agreements between Developer and Franchisor and its Affiliates, including payment of all monetary obligations due Franchisor and its Affiliates;
- (b) The transferee executes Franchisor's then current form of Development Agreement and Franchise Agreement (which shall limit the term of the transferee's Development Agreement and
Franchise Agreement to the unexpired term of this Agreement and which shall supersede the terms of this Agreement), Guaranty and Assumption of Obligations, and other collateral agreements Franchisor may then require in connection with new Development Agreements and Franchise Agreements;
- (c) The transferee provides Franchisor a waiver and release with respect to liability for any financial data, earnings claims, representations and other information Developer or its representatives provided the transferee;
- (d) Each Principal executes a Guaranty and Assumption of Obligations (Exhibit F-1).
- (e) The transferee and the transferee's Controlling Principal and/or designated manager satisfactorily complete Franchisor's Area Developer training program, if any;
- (f) The transferee and the transferee's Principals apply to Franchisor for acceptance as a Jersey Mike's developer, and furnishes to Franchisor the information and references that Franchisor requests to determine transferee's and its Principals' skills, qualifications and economic resources;
- (g) The transferee and the transferee's Principals demonstrate that it and the Principals have the skills, qualifications, ethics, moral values and economic resources necessary, in Franchisor's judgment, to develop JERSEY MIKE's restaurants, and to fulfill its obligations to Franchisor;
- (h) If the transferee and/or its Principals are an existing Jersey Mike's franchisee, the transferee and the transferee's Principals must be approved by Franchisor, in its sole and absolute discretion, for growth;
- (i) Franchisor receives a transfer fee of Five Thousand Dollars ($5,000.00) for services related to approving the Transfer of the Development Agreement, and Five Thousand Dollars ($5,000.00) for each Franchise Agreement transferred to the transferee;
- (j) Developer and its Affiliates and their respective Principa
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
The 2025 Jersey Mikes Franchise Disclosure Document states that franchisees must obtain prior written consent from Jersey Mikes before effectuating an Asset Transfer. According to the document, neither the franchisee nor any principal can effectuate an Asset Transfer before the franchised restaurant opens for business. After the restaurant opens, any Asset Transfer is subject to Jersey Mikes's approval, which they may condition on certain requirements.
These conditions include the franchisee being in full compliance with all obligations and agreements with Jersey Mikes, including payment of all monetary obligations. The transferee must execute Jersey Mikes's current form of franchise agreement, Guaranty and Assumption of Obligations, and other collateral agreements that Jersey Mikes may require. Additionally, each principal of the proposed transferee must meet Jersey Mikes's criteria for qualifying as a new franchisee.
The transferee must also provide Jersey Mikes with a waiver and release regarding liability for any financial data, earnings claims, representations, and other information provided by the developer or its representatives. Each principal must execute a Guaranty and Assumption of Obligations. The transferee and their controlling principal or designated manager must satisfactorily complete Jersey Mikes's Area Developer training program, if any. The transferee and their principals must apply for acceptance as a Jersey Mike's developer and furnish all requested information to determine their skills, qualifications, and economic resources.
Furthermore, the transferee and their principals must demonstrate the necessary skills, qualifications, ethics, moral values, and economic resources to develop Jersey Mike's restaurants and fulfill their obligations to Jersey Mikes. If the transferee or its principals are existing Jersey Mike's franchisees, they must be approved for growth by Jersey Mikes. Jersey Mikes also requires a transfer fee of $5,000 for services related to approving the transfer of the Development Agreement and an additional $5,000 for each Franchise Agreement transferred to the transferee. Finally, the developer and its affiliates must provide an unconditional release of all claims against Jersey Mikes, and the developer must comply with the right of first refusal provisions outlined in the agreement.