What documents must a Red Wagon Club franchisee and transferee sign in connection with a transfer?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
anchisee (or Franchisee's owners) and the transferee (and its owners) to affect the transfer, and all other information Franchisor requests about the proposed transfer, and such transfer meets all of Franchisor's requirements, including criteria for terms and conditions, closing date, purchase price, amount of debt and payment terms;
- (3) Franchisee (and Franchisee's owners) and the transferee (and its owners) sign all of the documents Franchisor is then requiring in connection with a transfer, in a form satisfactory to Franchisor, including: (i) a general release of any and all claims against Franchisor and its affiliates and Franchisor and its owners, officers, directors, employees, and agents, (ii) a covenant that Franchisee and Franchisee's transferring owners (and Franchisee's and their immediate family members) will not, for two (2) years beginning on the transfer's effective date, engage in any of the activities proscribed in Section 18.E below, (iii) covenants that Franchisee and Franchisee's transferring owners satisfy all other post-termination obligations under this Agreement;
- (4) Franchisee has paid all Program Fees, Brand Fund contributions, and other amounts owed to Franchisor, its affiliates, and third-party vendors, and have submitted all required reports and statements;
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, both the franchisee (and their owners) and the transferee (and their owners) must sign all documents that Red Wagon Club requires for a transfer. These documents must be in a form satisfactory to Red Wagon Club.
The required documents include: a general release of any and all claims against Red Wagon Club and its affiliates, along with their respective owners, officers, directors, employees, and agents. Additionally, there must be a covenant that the franchisee and their transferring owners will not engage in activities proscribed in Section 18.E of the agreement for two years following the transfer's effective date. This also includes covenants that the franchisee and their transferring owners will satisfy all other post-termination obligations under the Franchise Agreement.
Furthermore, if the transfer involves the Franchise Agreement itself, the transferee must sign Red Wagon Club's current form of franchise agreement and any related documents. The provisions within this new agreement may differ significantly from the original agreement, potentially affecting aspects such as the Program Fee, Brand Fund contribution, and territorial protections. However, the term of the new franchise agreement will only cover the remainder of the original term.