If a 360 Painting franchisee proposes to transfer ownership interest, what specific documentation must be provided to 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or any Equity Holder proposes a Transfer that will sell: (i) fifteen percent (15%) or more of the assets of the Franchised Business; or (ii) any ownership interest in this Agreement or a Franchisee entity, Franchisee shall obtain and deliver a bona fide, executed written offer or proposal to purchase, along with all pertinent documents including any contract or due diligence materials to Franchisor.
The offer must apply only to the sale of the above and may not include any other property or rights of Franchisee or its Equity Holders.
Franchisor shall, for thirty (30) days from the date of delivery of the last of all such required documents, have the right, exercisable by written notice to Franchisee, to purchase the proposed assets or ownership interests for the price and on the same terms and conditions contained in such offer or proposal.
Franchisor may substitute cash for the fair market value of any form of payment proposed in such offer or proposal.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, if a franchisee or equity holder proposes a transfer that will sell 15% or more of the franchised business's assets, or any ownership interest in the agreement or franchisee entity, the franchisee must obtain and deliver a bona fide, executed written offer or proposal to purchase to 360 Painting. This offer must include all pertinent documents, including any contract or due diligence materials.
This requirement allows 360 Painting to assess the proposed transfer and exercise its right of first refusal. The offer must apply only to the sale of the assets or ownership interests and cannot include any other property or rights of the franchisee or its equity holders.
360 Painting then has 30 days from the delivery date of all required documents to decide whether to purchase the assets or ownership interests themselves, matching the price, terms, and conditions of the offer. 360 Painting can also substitute cash for the fair market value of any proposed form of payment.
This process ensures that 360 Painting retains control over who becomes a franchisee and protects the brand's interests by allowing them to step in if they deem it necessary. It is a fairly standard practice in franchising to have these types of restrictions and rights related to transfers.