When a Pump It Up franchisee proposes a transfer, what documentation must be submitted to the franchisor?

r Approval of Transfer.

• (1) You must advise us in writing of any proposed Transfer, submit to us (or cause the proposed transferee to submit) a franchise application for the proposed transferee and a copy of all contracts and all other agreements or proposals, and all other information requested by us, relating to the proposed Transfer. Along with that required information, you must pay a transfer fee (the "Transfer Fee"). The Transfer Fee you will pay us is currently between $10,000 and $20,000 depending upon the amount of initial training and support that you will require. With your written notice of your intent to transfer the Franchised Business, you will pay us a deposit towards the Transfer Fee in the amount of $3,000 (the "Transfer Deposit"). The Transfer Deposit must be paid before the proposed Transferee arrives for the Training Program to cover our costs to begin to review the transfer documentation. The Transfer Deposit is non-refundable. If the proposed Transfer does not close and the prospective transferee has not attended any portion of our Training Program, we shall apply the Transfer Deposit against the Transfer Fee for any subsequent transfer that you close within the 12-month period following your initial transfer application. If we do not exercise our right of first refusal (as set forth in Section 16.G.), the decision as to whether or not to approve a proposed Transfer will be made by us in our sole discretion and will include numerous factors deemed relevant by us. These factors may include, but need not be limited to, the following:

  • (a) the proposed transferee meets our then-current standards for new franchisees and has sufficient business experience, aptitude, and financial resources to operate the Franchised Business;
  • (b) you have paid all amounts owed to us, our affiliates, and third-party vendors, have submitted all required reports and statements to us, and are not in violation of this Agreement;
  • (c) neither the proposed transferee nor its owners or affiliates have an ownership interest (direct or indirect) in or perform services for a Competing Business (as defined in Section 18.B.(1)(c));
  • (d) the proposed transferee (or its Operating Principal) satisfactorily completes our initial training program (and any other required training programs we require) and pays any then-current training fees;
  • (e) the proposed transferee has demonstrated an ability to obtain possessory rights in the Premises;

• (f) you have corrected any existing deficiencies of the Franchised Business of which we have notified you, and/or the proposed transferee agrees to upgrade, remodel, and refurbish the Franchised Business in accordance with our then-current requirements and specifications for Pump It Up Businesses within the time period we specify following the effective date of the Transfer (we will advise the proposed transferee before the effective date of the Transfer of the specific actions that are required and the time period within which such actions must be taken);

• (g) if you or your owners finance or intend to finance any part of the sale to the proposed transferee , you and/or your owners agree that all of the transferee's obligations under any promissory notes, agreements, or security interests reserved in the Franchised Business are subordinate to the transferee's obligation to pay Royalties, Brand Fund contributions, and other amounts due to us, our affiliates, and third-party vendors and otherwise to comply with this Agreement; you (and your transferring owners) must sign a general release, in a form satisfactory to us, which releases any and all claims against us and our affiliates, officers, directors, employees, and agents; and

• (h) you must modify and/or upgrade certain equipment, safety features, and computer hardware or software to our then-current standards prior to the closing of the proposed transfer.

• (2) If we approve a proposed Transfer, prior to the Transfer becoming effective:

• (a) you or the proposed transferee must pay to us the balance of the Transfer Fee to reimburse us for reasonable expenses associated with reviewing the Transfer. The Transfer Fee will be waived if the proposed transferee: (1) is an Entity formed by you for the convenience of ownership as set forth in Section 16.C.; or (2) has obtained the Franchised Business as a result of your death or permanent incapacity as provided in Section 16.D.;

• (b) if the proposed transferee comes through an investigation process with a franchise sales broker that we have retained, then the transferee must pay our then-current Initial Franchise Fee instead of the Transfer Fee. This enables us to pay the additional costs we incur with a franchise sales broker, including the payment of the broker's commissions.

• (c) you and the proposed transferee must sign either an assignment agreement and any amendments to this Agreement deemed necessary or desirable by us to reflect the Transfer, or our then-current standard form of franchise agreement for an initial term ending on the expiration date of the Initial Term of this Agreement. We will choose which documents you and the proposed transferee are required to sign. In either event, if the proposed transferee is an Entity, the transferee must complete Exhibit 4 as required by Section 14.B. and all individuals identified in Section 14.C. must sign the guaranty attached as Exhibit 5;

• (d) the proposed transferee must sign our then-current Software License Agreement; and

• (e) you (and all of your owners) must, at our request, sign a written guaranty pursuant to which you will remain liable for all obligations to us incurred before the date of the Transfer.

• (3) Following the effective date of the Transfer:

• (a) you and your transferring owners agree not to engage in any of the activities proscribed Section 18.B. below, for a period of 2 years, beginning on the effective date of the Transfer; and

• (b) you and your transferring owners will not use any Mark, any colorable imitation of a Mark, or other indicia of a Pump It Up Business in any manner or for any purpose; or utilize for any purpose any trade name, trade or service mark, or other commercial symbol that suggests or indicates a connection or association with us.

• C. Transfer for Convenience of Ownership. If you are an individual or a partnership and you would like to Transfer this Agreement to a corporation or limited liability company formed exclusively for the convenience of ownership, the requirements of Section 16.B. will apply to such a Transfer. However, you will not be required to pay a Transfer Fee under a transfer for convenience.

Source: Item 23 — RECEIPTS (FDD pages 60–225)