Under what conditions will Monicals Pizza consent to a transfer of the franchise agreement to a Controlled Entity?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
18.3.1 If Franchisee wishes to transfer this Agreement or any interest herein to a corporation, limited liability company or other legal entity which shall be entirely owned by, or controlled by, Franchisee ("Controlled Entity"), which Controlled Entity is being formed for the financial planning, tax or other convenience of Franchisee, Franchisor's consent to such transfer shall be conditioned upon the satisfaction of the following requirements:
18.3.1.1 the Controlled Entity is newly organized or the Franchise Operating Entity and its charter provides that its activities are confined exclusively to the operation of the Franchised Restaurant;
18.3.1.2 Franchisee or all holders of a legal or beneficial interest in Franchisee own all of the equity and voting power of the outstanding stock or other capital interest in the Controlled Entity;
18.3.1.3 Franchisee is in compliance with all of the provisions of this Agreement, and all obligations of Franchisee to Franchisor or any Affiliate are fully paid and satisfied; provided, however, that neither Franchisee nor the Controlled Entity shall be required to pay a transfer fee as required pursuant to Section 18.2.8;
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
18.3.1.7 copies of the Controlled Entity's articles of incorporation or organization, bylaws, operating agreement, federal tax identification number and other governing regulations or documents, including resolutions of the board of directors authorizing entry into this Agreement, have been promptly furnished to Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, Monicals Pizza will consent to the transfer of a franchise agreement to a Controlled Entity if certain conditions are met. A "Controlled Entity" is defined as a corporation, limited liability company, or other legal entity entirely owned or controlled by the franchisee, typically formed for financial planning, tax, or other convenience.
Monicals Pizza requires that the Controlled Entity be newly organized or have its charter specifically limiting its activities to operating the franchised restaurant. The franchisee, or all holders of legal or beneficial interest in the franchisee, must own all equity and voting power in the Controlled Entity. Additionally, the franchisee must be in full compliance with the franchise agreement, with all obligations to Monicals Pizza or its affiliates fully paid. Notably, no transfer fee is required in this specific scenario.
The Controlled Entity must enter into a written agreement assuming all obligations of the franchise agreement and related operational agreements. All holders of interest in the Controlled Entity must personally guarantee the entity's obligations to Monicals Pizza. Finally, all ownership certificates of the Controlled Entity must clearly state that they are subject to transfer restrictions outlined in the franchise agreement, and copies of the Controlled Entity's governing documents must be provided to Monicals Pizza.