If Mrcool approves a transfer of the Franchise Agreement, is the Franchisee relieved of their obligations under the Agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
llary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee and their respective spouses shall personally execute the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1. Each owner of the transferee shall also be required to execute such further agreements designated by Franchisor whereby the proposed transferee assumes each and every obligation and responsibility of Franchisee as set forth in this Agreement;
- (5) All obligations of Franchisee under this Agreement and the Ancillary Agreements shall be assumed by the transferee, each individual owner of transferee, and their respective spouses in a manner satisfactory to Franchisor;
- (6) Franchisee, each Owner, and each Spouse must execute the General Release attached to this Agreement as Exhibit 8 releasing Franchisor, Franchisor's affiliates and Franchisor's past and present officers, directors, shareholders, members, partners, agents, representatives, independent contractors, servants and employees, of any and all claims against Franchisor for matters arising on, or before, the effective date of the Transfer;
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, even if Mrcool approves a transfer of the Franchise Agreement, the franchisee, each owner, and each spouse will remain liable for all obligations to Mrcool as outlined in the agreement. The obligations under the agreement and any ancillary agreements will be assumed by the transferee, each individual owner of the transferee, and their respective spouses in a manner satisfactory to Mrcool.
To facilitate the transfer, the franchisee, each owner, and each spouse must execute a General Release, releasing Mrcool and its affiliates from any claims for matters arising on or before the effective date of the transfer. The approval of a transfer by Mrcool does not constitute approval of future transfers or waive the requirement for Mrcool to approve such future transfers.
In essence, while the transferee assumes the obligations, the original franchisee remains liable unless specifically released, ensuring Mrcool has recourse for any outstanding issues. This is a fairly typical arrangement in franchising, designed to protect the franchisor's interests during ownership transitions. Prospective franchisees should carefully consider these ongoing liabilities when planning an exit strategy.