What constitutes a breach of the Management Recruiters Franchise Agreement regarding assignment or transfer of the franchise?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee attempts to transfer the Franchise Business or make an assignment of this Agreement in violation of Section 13 of this Agreement;
13.2. By Franchisee. Franchisee understands and acknowledges that the rights and duties created by this Agreement are personal to Franchisee and its Principals and that Franchisor has entered into this Agreement in reliance upon the individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee and its Principals. Therefore, except as hereinafter provided, neither Franchisee's interest in this Agreement nor any of its rights or privileges herein or obligations hereunder shall be sold, assigned, transferred, sublicensed, shared, or divided or otherwise transferred by Franchisee, in whole or in part, voluntarily or involuntarily, by operation of Law or otherwise in any manner, except upon prior written approval of Franchisor, and in accordance with the provisions of this Section 13. Any assignment or transfer without such approval shall constitute a breach of this Agreement and shall convey no rights or interest in the Franchise Business to such purported assignees or transferees. The only permissible methods of sale, transfer or assignment of the Franchise Business are those set forth in this Section 13.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to the 2024 Management Recruiters Franchise Disclosure Document, a franchisee's attempt to transfer the franchise business or assign the agreement in violation of Section 13 constitutes a breach of the agreement. Section 13 outlines the specific conditions and procedures required for any transfer or assignment of the franchise.
Specifically, the agreement states that the rights and duties within the agreement are personal to the franchisee and its principals. Management Recruiters has entered into the agreement based on the character, skills, aptitude, business ability, and financial capacity of the franchisee and its principals. Therefore, the franchisee cannot sell, assign, transfer, sublicense, share, or divide their interest in the agreement without prior written approval from Management Recruiters. This restriction applies to any transfer, whether voluntary, involuntary, or by operation of law.
Any transfer or assignment conducted without the required approval from Management Recruiters is considered a breach of the agreement. Such unauthorized transfer conveys no rights or interests in the franchise business to the purported assignee or transferee. The only permissible methods for selling, transferring, or assigning the franchise business are those explicitly detailed in Section 13 of the Franchise Agreement.