Common use of Transfer by Franchisee Clause in Contracts

Transfer by Franchisee. A. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that the Franchisor has granted this franchise in reliance on Franchisee's business skill, financial capacity and personal character. Accordingly, neither Franchisee or any immediate or remote successor to any part of Franchisee's interest in this franchise nor any individual, partnership, corporation or other legal entity which directly or indirectly controls Franchisee shall sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this franchise or in any legal entity which directly or indirectly owns this franchise without the prior written consent of the Franchisor, which consent shall be subject to the conditions precedent set forth below, but which will not be unreasonably withheld; provided, however, that the Franchisor's prior written consent shall not be required for a transfer of less than a five (5%) percent interest to a publicly held corporation or inter-family or intra-franchise transfers. A publicly held corporation is a corporation registered under the Securities Exchange Act of 1934. Any purported assignment or transfer by operation of law or otherwise not having the written consent of the Franchisor required by this Section 12.2.A., shall be null and void and shall constitute a material breach of this Agreement, for which the Franchisor may then terminate without opportunity to cure pursuant to Section 13.2 of this Agreement. B. The Franchisor shall not unreasonably withhold its consent to a transfer of any interest in Franchisee, this Agreement, or in the Franchised Business, subject to Franchisor's prior right of first refusal and except that the Franchisor may, in its sole discretion, require any or all of the following conditions precedent be met prior to its approval:

Transfer by Franchisee. A. (1) Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that the Franchisor has granted this franchise in reliance on Franchisee's the business skill, financial capacity and personal charactercharacter of the Franchisee and any guarantor of Franchisee. Accordingly, neither Franchisee nor any initial or any immediate subsequent successor or remote successor assign to any part of Franchisee's interest in this franchise franchise, nor any individual, partnership, corporation or other legal entity which directly or indirectly controls has or owns any interest in this Agreement, in the franchised business or in Franchisee shall sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any direct or indirect interest in this franchise Agreement, in the franchised business or in any legal entity which directly or indirectly owns this franchise without the prior written consent of the Franchisor, which consent shall be subject to the conditions precedent set forth below, but which will not be unreasonably withheld; provided, however, that the Franchisor's prior written consent shall not be required for a transfer of less than a five one percent (51%) percent interest to in a publicly publicly-held corporation or inter-family or intra-franchise transferscorporation, and further, Franchisor's prior written consent for a Minority Interest Transfer (as hereinafter defined) shall be exclusively based upon the requirements enumerated in Section XII.B.(3) hereof. A publicly publicly-held corporation is a corporation having its securities registered pursuant to Section 12 under the Securities Exchange Act of 1934, as amended, or a corporation subject to the requirements of Section 15(d) under the Securities Exchange Act of 1934, as amended. Any purported assignment or transfer transfer, by operation of law or otherwise otherwise, not having the written consent of the Franchisor required by this Section 12.2.A., XII.B.(l) shall be null and void and shall constitute a material breach of this Agreement, for which the Franchisor may then terminate this Agreement without opportunity to cure pursuant to Section 13.2 XIII.C.(5) of this Agreement. B. The (2) Franchisor shall not unreasonably withhold its consent to a transfer of any interest in Franchisee, in the franchised business or in this Agreement, or in the Franchised Business, subject to Franchisor's prior right of first refusal and except that the . Franchisor may, in its sole discretion, require any or all of the following as conditions precedent be met prior to of its approval: (a) All of Franchisee's accrued monetary obligations and all other outstanding obligations to Franchisor, its subsidiaries and its affiliates shall have been satisfied; (b) Franchisee is not in material default of any provision of this Agreement, any amendment hereof or successor hereto, or any other agreement between Franchisee and Franchisor, or its subsidiaries and affiliates; (c) The transferor shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its officers, directors, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under this Agreement and federal, state and local laws, rules and ordinances; (d) If the transferee is the Operating Principal or the Operating Designee, then the requirements of Section V.D. shall be satisfied by such transferee; (e) If the transferee is a Franchisee's Principal, then the requirements of Section V.B.(8) shall be satisfied by such transferee; (f) The transferee shall enter into a written agreement, in a form satisfactory to Franchisor, assuming full, unconditional, joint and <PAGE> several liability for and agreeing to perform from the date of the transfer, all obligations, covenants and agreements contained in this Agreement which the transferor was obligated to perform. If, however, the transferee is to become an Operating Principal, Operating Designee, or Franchisee's Principal, such transferee shall be required to enter into a written agreement, in a form reasonably satisfactory to Franchisor assuming full, unconditional, joint and several liability for and agreeing to perform from the date of the transfer, all obligations, covenants, and agreements contained in this Agreement; (g) The transferee shall demonstrate to Franchisor's satisfaction that transferee meets the criteria considered by Franchisor when reviewing a prospective franchisee's application for a franchise including but not limited to Franchisor's educational, managerial and business standards; transferee's good moral character, business reputation and credit rating; transferee's aptitude and ability to conduct the business franchised herein (as may be evidenced by prior related business experience or otherwise); transferee's financial resources and capital for operation of the business; and the geographic proximity of other Chili's Grill & Bar restaurants owned or operated by transferee and the territories or areas with respect to which transferee is obligated to develop Chili's Grill & Bar restaurants pursuant to any development agreement between Franchisor and Franchisee, in relation to the Restaurant. (h) At Franchisor's option, the transferee shall execute (and/or, upon Franchisor's request, shall cause all interested parties to execute), for a term ending on the expiration date of this Agreement and with such renewal term as may be provided by this Agreement, the standard form franchise agreement then being offered to new System franchisees and other ancillary agreements as Franchisor may require for the franchised business, which agreements shall supersede this Agreement and its ancillary documents in all respects and the terms of which agreements may differ from the terms of this Agreement, except that the percentage royalty fee and advertising contribution shall remain unchanged; provided, however, that the transferee shall not be required to pay any initial franchise fee; (i) The transferee, at its expense, shall upgrade the Restaurant to conform to the then-current standards and specifications of System restaurants, and shall complete the upgrading and other requirements within the time specified by Franchisor. Notwithstanding the foregoing, Franchisee shall not be required to make any such upgrade unless at least fifty percent (50%) of the restaurants of the same prototype or style owned or operated by Franchisor have made the same or similar upgrade; (j) If a transfer of all of Franchisee's interest in this Agreement, Franchisee and any guarantor of Franchisee shall remain liable for all of the obligations to Franchisor in connection with the franchised business prior to the effective date of the transfer and shall execute any and all instruments reasonably requested by Franchisor to evidence such liability; (k) At the transferee's expense, the transferee, the transferee's manager, the transferee's Operating Principal and the transferee's Operating Designee, if applicable, shall complete any training programs then in effect for franchisees upon such terms and conditions as Franchisor may reasonably require; (l) Franchisee shall pay a transfer fee in an amount sufficient to reimburse Franchisor for its actual and reasonable costs and expenses associated with reviewing the application to transfer, including, without limitation, legal and accounting fees; and <PAGE> (m) If transferee is a corporation or a partnership, transferee shall make and will be bound by any or all of the representations, warranties and covenants set forth at Section V.B. as Franchisor requests. Transferee shall provide to Franchisor evidence satisfactory to Franchisor that the terms of Section V.B. have been satisfied and are true and correct on the date of transfer. (3) Franchisor will apply the transfer requirements set forth in Section XII.B.