Is a Pearce Bespoke franchisee required to execute a written agreement regarding post-term obligations as a condition of transfer?
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 the 2025 Pearce Bespoke Franchise Disclosure Document, a franchisee is required to execute a written agreement regarding post-term obligations as a condition of transfer. Specifically, before a franchisee can transfer their Pearce Bespoke franchise to another party, they must sign an agreement that is satisfactory to Pearce Bespoke. In this agreement, the franchisee must agree to adhere to all applicable post-term obligations and covenants outlined in the existing Franchise Agreement.
This requirement ensures that the outgoing Pearce Bespoke franchisee remains accountable for certain responsibilities even after the transfer is complete. These responsibilities typically include maintaining confidentiality, adhering to non-compete clauses, and protecting Pearce Bespoke's brand and business system. By signing this agreement, the franchisee acknowledges their ongoing obligations and commits to upholding them, which protects the franchisor's interests and maintains consistency within the franchise system.
For a prospective Pearce Bespoke franchisee, this condition highlights the importance of understanding and planning for post-term obligations. Before deciding to sell or transfer the franchise, franchisees should carefully review the terms of the Franchise Agreement and consult with legal counsel to fully understand their responsibilities. This will help ensure a smooth transfer process and avoid any potential disputes or liabilities related to post-term obligations.