What happens if the Monicals Pizza Developer fractionalizes any of the Development Rights granted pursuant to the Development Agreement without prior written consent of Franchisor?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2.2 Developer, without Franchisor's prior written consent, by operation of law or otherwise, shall not sell, assign, transfer, convey, give away or encumber any part of its interest in this Development Agreement, its interest in the Development Rights granted hereby or its interest in any entity that owns any interest in such rights, and shall not offer, permit or suffer the same to be sold, assigned, transferred, conveyed, given away or encumbered in any way. Developer shall not, without the prior written consent of Franchisor, fractionalize any of the Development Rights granted pursuant to this Development Agreement. Any purported sale, assignment, transfer, conveyance, gift or encumbrance of any of Developer's rights herein not having Franchisor's express consent shall be null and void and shall constitute a material default of this Development Agreement.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, if a developer fractionalizes any of the Development Rights granted under the Development Agreement without obtaining prior written consent from Monicals Pizza, it constitutes a material default of the Development Agreement. This means the action is considered a significant breach of the agreement's terms.
Specifically, the FDD states that the Development Rights are personal to the developer and granted based on their qualifications. The developer represents that they are entering the agreement intending to comply with its terms, not to resell the Development Rights. Therefore, any attempt to fractionalize these rights without Monicals Pizza's approval is a violation of this representation.
The consequence of such a default is that any purported sale, assignment, transfer, conveyance, gift, or encumbrance of the developer's rights without Monicals Pizza's express consent is considered null and void. This protects Monicals Pizza's interests by ensuring that the Development Rights are not transferred or divided without their knowledge and approval, maintaining control over who develops Monicals Pizza restaurants within the designated territory.