Does the Nothing Bundt Cakes Franchise Agreement outline specific provisions for transfer?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN | SUMMARY | |
|---|---|---|---|
| FRANCHISE OR OTHER AGREEMENT | |||
| "Transfer" by you – definition | 17.2 and 17.3 of Franchise Agreement | pledge or transfer of any fractional portion of your voting stock, or any increase in the number of outstanding shares of your voting stock which results in a change in ownership; (ii) if you are a partnership, upon the assignment, sale, pledge or transfer of any fractional partnership ownership interest; or (iii) if you are a limited liability company, upon any assignment, sale, pledge or transfer of any fractional portion of any interest in the limited liability company. | |
| l. | Our approval of transfer by franchisee | 17.2 and 17.4 of Franchise Agreement and 9 of Development Rights Rider | You may not transfer any rights in the franchise without our prior written consent. We have the right to condition our approval of any sale, transfer, assignment or encumbrance as described below. Your development rights under Development Rights Rider are not assignable. |
| m. | Conditions for our approval of transfer | 17.4 of Franchise Agreement | We will approve a proposed transfer if: (i) all of your accrued monetary obligations to us, our affiliates, and our approved and designated suppliers have been paid; (ii) all existing defaults under the Franchise Agreement have been cured; (iii) you execute a general release in favor of us and our affiliates; (iv) you provide us a copy of the executed purchase agreement; (v) the transferee meets our qualifications; (vi) the transferee executes our then-current Franchise Agreement for the remaining unexpired term of the Franchise Agreement; (vii) you pay us a $10,000 transfer fee in the event of a transfer of the Bakery or $5,000 in the event of a transfer of the ownership interests in franchisee; (viii) the transferee satisfactorily completes our training program; (ix) you comply with the post term provisions of the Franchise Agreement; (x) the transferee obtains all necessary licenses and permits required to operate the Bakery; (xi) to the extent required by the terms of any |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 64–71)
What This Means (2025 FDD)
According to Nothing Bundt Cakes's 2025 Franchise Disclosure Document, the Franchise Agreement does contain specific provisions regarding the transfer of franchise rights. A franchisee cannot transfer any rights in the franchise without prior written consent from Nothing Bundt Cakes. This consent is conditional, and Nothing Bundt Cakes has the right to set the terms for approval of any sale, transfer, assignment, or encumbrance. Development rights under the Development Rights Rider are explicitly non-assignable.
The FDD outlines specific conditions that must be met for Nothing Bundt Cakes to approve a transfer. These conditions include paying all accrued monetary obligations to Nothing Bundt Cakes, its affiliates, and approved suppliers, as well as curing any existing defaults under the Franchise Agreement. The franchisee must also execute a general release in favor of Nothing Bundt Cakes and its affiliates and provide a copy of the executed purchase agreement. The transferee must meet Nothing Bundt Cakes's qualifications and execute the then-current Franchise Agreement for the remaining unexpired term.
Furthermore, the franchisee must pay a transfer fee of $10,000 if transferring the Bakery itself, or $5,000 if transferring ownership interests in the franchisee entity. The transferee must also satisfactorily complete Nothing Bundt Cakes's training program and obtain all necessary licenses and permits to operate the Bakery. Compliance with the post-term provisions of the Franchise Agreement is also required. These stipulations are typical in franchising, as franchisors want to maintain brand standards and ensure that new operators are fully qualified and committed.