What will the then-current franchise agreement for a Red Wagon Club franchise be modified to reflect?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
gram to Franchisor's satisfaction;
- (7) if the proposed transfer (including any assignment of the lease or subleasing of the Office) requires notice to or approval from Franchisee's landlord, or any other action under the terms of the lease, Franchisee have taken such appropriate action and delivered Franchisor evidence of the same;
- (8) the transferee shall (if the transfer is of this Agreement), or Franchisee shall (if the transfer is of a Controlling Interest in Franchisee or one of its owners), sign Franchisor's thencurrent form of franchise agreement and related documents, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement, including the amount of the Program Fee, the Brand Fund contribution, and/or changes to the imposition of territorial protections; provided, however, that the term of the new franchise agreement signed will equal the remainder of the then-remaining Term;
- (9) Franchisee pays Franchisor, or arranges for the payment to Franchisor by the transferee, a transfer fee equal to 75% of Franchisor's then-current Initial Franchise Fee, unless (a) the transfer is o
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, the then-current franchise agreement may differ materially from the original agreement. Specifically, the provisions regarding the Program Fee, Brand Fund contribution, and territorial protections may be subject to change.
This modification occurs when a transfer of the agreement takes place. If the franchisee transfers the agreement, or a controlling interest in the franchise, they must sign the then-current form of the franchise agreement. The term of the new franchise agreement will equal the remainder of the original term.
Additionally, the franchisee will have to pay a transfer fee. This fee is equal to 75% of Red Wagon Club's then-current Initial Franchise Fee. However, there are exceptions to this. If the transfer is a non-controlling interest between an existing employee and a new shareholder, the transfer fee is $1,500. If the transfer is to an existing Red Wagon Club franchisee, the transfer fee is 33% of the then-current Initial Franchise Fee.