Under what condition is an Asset Transfer prohibited for a Jersey Mikes franchise?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.2 Conditions to Voluntary Transfer of Rights. Neither Franchisee nor any Principal (defined in Section 31) shall effectuate an Asset Transfer (defined in Section 31) before the Franchised Restaurant opens for business under any circumstances. After the Franchised Restaurant opens for business, any Asset Transfer will 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 Franchisee agrees are reasonable):
- a. At the time of A sset Transfer, Franchisee is in full compliance with Franchisee's obligations under this Agreement and all other agreements between Franchisee and Franchisor and its Affilia tes, including payment of all monetary obligations due Franchisor and its Affiliates;
- b. The transferee executes Franchisor's then-current form of franchise agreement, Guaranty and Assumption of Obligations, and other collateral agreements Franchisor
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, a franchisee or any principal associated with the franchise is prohibited from executing an Asset Transfer before the franchised restaurant has opened for business. After the restaurant is open, any asset transfer is subject to the franchisor's prior written consent, which they may grant or deny at their discretion.
This restriction ensures that the franchisee is committed to establishing and operating the Jersey Mikes restaurant before considering a transfer of assets. This protects the brand's integrity and the stability of the Jersey Mikes system by ensuring that only qualified and committed individuals are involved in the business, at least initially.
For a prospective franchisee, this means they cannot sell or transfer the assets of the franchise until the restaurant is operational. This requirement is fairly standard in the franchise industry, as franchisors want to ensure that franchisees are serious about running the business before they can transfer it to someone else. It is important to note that even after the restaurant is open, Jersey Mikes retains the right to approve or deny any asset transfer, giving them significant control over who can become a franchisee.