If a Lees Famous Recipe franchisee is not in good standing, can they assign the agreement?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
If we elect to grant out consent, then in addition to other requirements, we may condition our consent upon your satisfaction of and compliance with the following conditions:
All of your accrued monetary obligations to us and our affiliates have been satisfied, and you otherwise are in good standing under this Agreement and any other agreement between you and us;
The transferee (or the Operating Principal of the transferee, if applicable) is approved by us and demonstrates to our satisfaction that they meet our managerial, financial and business standards for new Lee's Famous Recipe Restaurants, possess a good business reputation and credit rating, and have the aptitude and ability to conduct the franchised business.
You understand that we may communicate directly with the transferee during the transfer process to respond to inquiries, as well as to ensure that the transferee meets our qualifications;
The transferee enters into a written agreement, in form satisfactory to us, assuming and agreeing to discharge all of your obligations and covenants under this Agreement for the remainder of the term under this Agreement, or, at our option, signs our then-current standard form of franchise agreement;
The transferee, the new Operating Principal, and up to at least three (3) managers, including the new general manager and assistant managers (or their operating equivalent), successfully complete the initial training program required of new Lee's Famous Recipe franchisees;
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, a franchisee's ability to assign their franchise agreement is contingent upon being in good standing with the company. Lees Famous Recipe may withhold consent for any reason regarding the assignment of the agreement. However, if Lees Famous Recipe elects to grant consent, there are specific conditions that must be met.
One of these conditions is that "all of your accrued monetary obligations to us and our affiliates have been satisfied, and you otherwise are in good standing under this Agreement and any other agreement between you and us." This means that if a franchisee has any outstanding financial obligations to Lees Famous Recipe or its affiliates, or if they are in violation of any terms of the franchise agreement or other agreements with the company, they will not be considered in good standing and will likely be unable to assign the agreement.
In addition to being in good standing, the prospective transferee must also meet Lees Famous Recipe's standards. The transferee must demonstrate that they meet the company's managerial, financial, and business standards for new Lees Famous Recipe Restaurants, possess a good business reputation and credit rating, and have the aptitude and ability to conduct the franchised business. The transferee must also enter into a written agreement, in a form satisfactory to Lees Famous Recipe, assuming all of the franchisee's obligations for the remainder of the term or sign the then-current standard form of franchise agreement. Furthermore, the transferee, the new Operating Principal, and at least three managers must successfully complete the initial training program required of new Lees Famous Recipe franchisees.