What agreement must the Controlled Entity enter into with Monicals Pizza when the franchise agreement is transferred?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
18.3.1.4 the Controlled Entity has entered into a written agreement with Franchisor expressly assuming the obligations of this Agreement and all other agreements relating to the operation of the Franchised Restaurant.
If the consent of any other party to any such other agreement is required, Franchisee has obtained such written consent and provided the same to Franchisor prior to consent by Franchisor;
18.3.1.5 all holders of a legal or beneficial interest in the Controlled Entity have entered into an agreement with Franchisor jointly and severally personally guaranteeing the full payment of the Controlled Entity's obligations to Franchisor and the performance by the Controlled Entity of all the obligations of this Agreement;
18.3.1.6 each stock certificate or other ownership interest certificate of the Controlled Entity has conspicuously endorsed upon the face thereof a statement in a form satisfactory to Franchisor that it is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon transfers and assignments by this Agreement; and
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise agreement to a Controlled Entity (a corporation, LLC, or other legal entity fully owned or controlled by the franchisee), the Controlled Entity must meet specific requirements to gain Monicals Pizza's consent.
Specifically, the Controlled Entity must enter into a written agreement with Monicals Pizza, expressly assuming all obligations outlined in the original franchise agreement and any other agreements related to the operation of the franchised restaurant. If any other party's consent is required for these agreements, the franchisee must obtain and provide written consent to Monicals Pizza before Monicals Pizza grants its consent to the transfer.
Furthermore, all holders of legal or beneficial interest in the Controlled Entity must enter into an agreement with Monicals Pizza, providing a joint and several personal guarantee for the full payment of the Controlled Entity's obligations to Monicals Pizza and ensuring the performance of all obligations under the franchise agreement. This ensures that Monicals Pizza has recourse to the personal assets of the owners of the Controlled Entity if the entity fails to meet its financial or operational obligations. Finally, each stock certificate or ownership interest certificate of the Controlled Entity must have a statement that it is subject to all transfer restrictions imposed by the franchise agreement.