Where is 'transfer' by the franchisee defined in the Red Wagon Club Franchise Agreement?
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 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, Item 22 discusses contracts related to the franchise agreement, including conditions and fees associated with transferring ownership. Specifically, it outlines the financial obligations and requirements that a franchisee must meet when transferring their franchise to another party.
If a franchisee intends to transfer their Red Wagon Club franchise agreement or a controlling interest in their business, the transferee or franchisee must sign the franchisor's current franchise agreement. The terms of this new agreement may differ significantly from the original, potentially affecting fees, brand fund contributions, and territorial protections. However, the term of the new franchise agreement will only be for the remainder of the original term.
Additionally, the franchisee is responsible for paying a transfer fee to Red Wagon Club. This fee is 75% of the then-current initial franchise fee. However, there are exceptions: the transfer fee is $1,500 for transfers of a non-controlling interest between existing employees or an existing employee and a new shareholder. If the transfer is to an existing Red Wagon Club franchisee, the transfer fee is 33% of the then-current initial franchise fee.