When transferring a Management Recruiters franchise, what written assumption is required of the proposed assignee(s) for the benefit of the Franchisor?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
meone other than an original signatory of this Agreement:
- the proposed assignee(s) or, if the proposed assignee is a corporation or limited liability company, its principal officers, shareholders, franchisees, partners, or directors, shall be of good moral character and demonstrate skills, qualifications, and economic resources necessary in Franchisor's reasonable judgment, to operate the franchise that this Agreement contemplates and, in any event, at least equal to the Franchisee's skills, qualifications, and economic resources;
- the proposed assignee(s) shall expressly assume in writing, for Franchisor's benefit, all Franchisee's obligations under this Agreement;
- the proposed assignee(s) shall have completed the training program and additional evaluation to Franchisor's sole subjective satisfaction, as described in Section 8;
- as of the date of any such transfer, Franchisee shall have fully satisfied all Franchisee's obligations, including accrued money obligations, to Franchisor and Franchisor's Affiliates and assignees under this Agreement and any other agreement, arrangement or understanding;
- Franchisor shall require the proposed assignee(s), including all of the principal officers, shareholders, franchisees, partne
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, if a franchisee desires to sell or transfer their franchise business, the proposed assignee(s) must expressly assume in writing all of the franchisee's obligations under the Franchise Agreement for the benefit of Management Recruiters. This means the new franchisee takes on all responsibilities and duties outlined in the original agreement.
In addition to the written assumption of obligations, the proposed assignee(s) must complete the training program and any additional evaluation to Management Recruiters' satisfaction. The proposed assignee(s) must also execute Management Recruiters' standard form Franchise Agreement, including any personal guarantees, although they will not be required to pay an initial franchise fee. The term of the agreement will be modified to equal the remaining term under the original agreement.
These conditions ensure that Management Recruiters maintains control over who operates its franchises and that the new franchisee is adequately trained and financially committed. The transfer is also contingent upon the franchisee fulfilling all outstanding obligations to Management Recruiters and its affiliates before the transfer can occur. The franchisee must also pay Management Recruiters a transfer fee of $5,000 to cover expenses related to the transfer.