What conditions must an assignee meet to assume Pearce Bespoke's obligations under the Franchise Agreement?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Pearce Bespoke Franchisee (and its partners and shareholders, if any) will not transfer (whether voluntary or
involuntary), assign or otherwise dispose of, in one or more transactions, Franchisee's business, all or substantially all of the assets of Franchisee's business, this Agreement or any controlling interest in Franchisee (a "controlling" interest will include a proposed transfer of fifty percent (50%) or more of the Capital Stock of a corporate Franchisee) without Franchisor's prior written consent, except to trusts established for Franchisee's benefit. Franchisor will not unreasonably withhold its consent to a transfer, subject to any or all of the following conditions described below which Franchisor may deem necessary:
All of Franchisee's accrued monetary obligations to Franchisor and suppliers will have been satisfied, and Franchisee is not in default under this Agreement;
Franchisee executes a written agreement in a form satisfactory to Franchisor, in which Franchisee covenantsto observe all applicable post-term obligations and covenants contained in this Agreement;
The transferee-franchisee enters into a written agreement in a form satisfactory to Franchisor assuming and agreeing to discharge all of Franchisee's obligations and covenants under this Agreement for the remainder of its term or, at Franchisor's option, executes Franchisor's then-current standard form of franchise agreement which may not contain any further rights of renewal, but may contain royalty rates and advertising contributions (which may be different than those contained in this Agreement), and an altered Franchised Territory;
The transferee-franchisee is not a competitor of Franchisor or the Business system and is approved by Franchisor and demonstrates to Franchisor's satisfaction that he/she meets Franchisor's managerial, financial, and business standards for new franchisees, possesses a good business reputation and credit rating, and has the aptitude and ability to conduct the franchised business.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, a franchisee needs the franchisor's prior written consent to transfer, assign, or dispose of their business, assets, the Franchise Agreement, or any controlling interest (50% or more of the capital stock) in the franchise. Pearce Bespoke will not unreasonably withhold consent, but the following conditions must be met:
First, all of the franchisee's accrued monetary obligations to Pearce Bespoke and its suppliers must be satisfied, and the franchisee cannot be in default under the Franchise Agreement. Second, the franchisee must execute a written agreement, satisfactory to Pearce Bespoke, to observe all applicable post-term obligations and covenants contained in the Franchise Agreement.
Third, the transferee-franchisee must enter into a written agreement, satisfactory to Pearce Bespoke, assuming and agreeing to discharge all of the franchisee's obligations and covenants under the Franchise Agreement for the remainder of its term. Alternatively, at Pearce Bespoke's option, the transferee-franchisee can execute Pearce Bespoke's then-current standard form of franchise agreement, which may not contain any further rights of renewal, but may contain different royalty rates and advertising contributions, and an altered Franchised Territory. Finally, the transferee-franchisee cannot be a competitor of Pearce Bespoke or its Business system. The transferee-franchisee must be approved by Pearce Bespoke and demonstrate that they meet Pearce Bespoke's managerial, financial, and business standards for new franchisees, possess a good business reputation and credit rating, and have the aptitude and ability to conduct the franchised business.