What standards must a prospective transferee meet to be approved for a 360 Painting franchise transfer?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
17.2 Assignment by Franchisee. Franchisee shall not subfranchise, sell, assign, transfer, merge, convey or encumber, in whole or in part (each, a "Transfer"), the Business, the Vehicles, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Business, the Vehicles, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior express written consent of Franchisor. In addition, if Franchisee is a corporation, limited liability company, partnership, business trust, or similar association or entity, the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, may not Transfer their equity interests in such corporation, limited liability company, partnership, business trust, or similar association or entity, without the prior written consent of Franchisor. Furthermore, in the event that any shareholder, member, partner, investor or other direct or indirect equity holder of Franchisee (the "Equity Holder") is a corporation, limited liability company, partnership, business trust, or similar association or entity, the interests of the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, in such Equity Holder, may not be Transferred, without the prior written consent of Franchisor. Any Transfer in violation of this Section shall be void and of no force and effect, will be ineffective against Franchisor and will constitute a material default hereunder. If Franchisee or an Equity Holder is a corporation, limited liability company, partnership, business trust, or similar association or entity with certificated equity interests, all stock or equity certificates of Franchisee or Equity Holder shall have conspicuously endorsed upon them a legend in substantially the following form:
"A transfer of this stock is subject to the terms and conditions of a 360 Painting, LLC FRANCHISE AGREEMENT dated the day of," Franchisor's consent to a Transfer of any interest in this Agreement, or of any direct or indirect ownership interest in the Franchisee, an Equity Holder or any owner thereof, shall not constitute a waiver of any claims Franchisor may have against Franchisee, the transferor or the transferee, nor shall it be deemed a waiver of Franchisor's right to demand compliance with the terms of this Agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, a 360 Painting franchisee needs prior express written consent from the franchisor to transfer their business. This includes selling, assigning, or conveying the business, vehicles, or the franchise agreement itself. This requirement extends to transfers occurring by operation of law or any other means. If a franchisee attempts to transfer without this consent, the transfer is considered void and a breach of the agreement.
For franchisees that are corporations, limited liability companies, partnerships, business trusts, or similar entities, the transfer restrictions extend to the equity holders. These equity holders cannot transfer their interests in the entity without the franchisor's prior written consent. This requirement cascades down, meaning that if an equity holder is itself an entity, the transfer of interests in that entity also requires the franchisor's consent. This multi-layered consent requirement ensures 360 Painting retains control over who ultimately owns and operates its franchises.
To ensure compliance, 360 Painting requires that all stock or equity certificates of the franchisee or any equity holder bear a specific legend. This legend indicates that any transfer of the stock is subject to the terms and conditions of the 360 Painting Franchise Agreement. The FDD specifies the inclusion of the date of the franchise agreement on the legend. The franchisor's consent to a transfer does not waive any claims it may have against the franchisee, the transferor, or the transferee, nor does it waive the franchisor's right to demand compliance with the terms of the agreement.