Can a Lees Famous Recipe franchisee assign their Franchise Agreement, and if so, under what conditions?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
We will have the right, at our option, to terminate this Agreement and all rights granted to you hereunder, without affording you any opportunity to cure such default, effective upon written notice to you, upon the occurrence of any of the following events: (i) if you cease to actively engage in development activities in the Development Area or otherwise abandon your development business for three (3) consecutive months, or any shorter period that indicates an objective intent by you to discontinue development of the Restaurants within the Development Area; (ii) if you become insolvent or are adjudicated bankrupt, or if you take any action, or if any action is taken by others against you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit of creditors or a receiver is appointed for you; (iii) if you purport to sell, transfer or otherwise dispose of your franchise entity or any interest in this Agreement, your business, or you are in violation of Section 6 hereof; (iv) if you fail to meet your development obligations under the Development Schedule for any single Development Period, and fail to cure such default within thirty (30) days of receiving notice thereof; (v) you or any Principal Owners violate the non-compete provisions set forth in Section 13 of this Agreement; (vi) if any Franchise Agreement that is entered into in order to fulfill your development obligations under this Agreement is terminated or subject to termination by us, pursuant to the terms of that Franchise Agreement; or (vii) you are in breach of any other term of this Agreement, and fail to cure such breach within thirty (30) days of receiving notice thereof.
Source: Item 23 — RECEIPTS (FDD pages 70–287)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, a Lees Famous Recipe franchisee's ability to assign their Franchise Agreement is restricted. The franchisor retains the right to terminate the agreement, without allowing an opportunity to cure the default, if the franchisee attempts to sell, transfer, or dispose of their franchise entity, any interest in the agreement, or their business, in violation of Section 6 of the agreement.
This means that a franchisee cannot freely transfer their rights and obligations under the Franchise Agreement without the franchisor's consent and adherence to specific conditions outlined in Section 6, which is not provided in the excerpt. Any unauthorized transfer attempt could result in immediate termination of the agreement.
Prospective franchisees should carefully review Section 6 of the Franchise Agreement within the FDD to fully understand the conditions under which assignment or transfer may be permitted, as well as the franchisor's rights and restrictions regarding such actions. Understanding these conditions is crucial for future business planning and potential exit strategies.