Is there a dependency between the transfer policy and the approval of assignment for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
st to the deceased or disabled Franchisee's or Equity Holder's spouse, heirs or members of his or her immediate family, provided all requirements of Section 17.4 have been complied with (except payment of the transfer fee, which shall not apply to such Transfers). A "disability" shall have occurred with respect to Franchisee if Franchisee, or, if Franchisee is a corporation, partnership or limited liability company, its controlling shareholder, partner, member or other equity holder, is unable to actively participate in its activities as Franchisee hereunder for any reason for a continuous period of three months. As used in this Section 17.3, "Franchisee" may include a disabled or deceased controlling shareholder, partner or member where the context so requires.
- 17.4 Approval of Assignment. Franchisor agrees not to unreasonably withhold its consent to a Transfer; provided however, that prior to the time of transfer, Franchisee, the respective transferor(s) and the respective transferee(s) all fulfill the terms of the transfer policy of Franchisor which is then in effect. Franchisor may, as part of such policy and in its sole discretion require that:
- (i) all monetary obligations (whether under this Agreement or any other agreement) of Franchisee, the transferor and the transferee (as applicable) to Franchisor or Franchisor's affiliates or subsidiaries, or other creditors, being paid in full;
- (ii) Franchisee, the transferor and the transferee (as applicable) not being in default under this Agreement or any other agreement between Franchisee and the transferor and Franchisor or Franchisor's affiliates or subsidiaries;
- (iii) Franchisee, the transferor and the transferee and their respective owners executing a general release, the same or similar to Franchisor's standard form of General Release, attached as Exhibit C-7, of any and all claims against Franchisor and its affiliates, subsidiaries, members, managers, officers, directors, employees and agents; provided, however, that if a general release is prohibited, Franchisee, the transferor and the transferee (as applicable) shall give the maximum release allowed by law;
- (iv) Franchisee or the tran
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the franchisor's approval of a franchise transfer is contingent upon the franchisee, the transferor, and the transferee fulfilling the terms of 360 Painting's transfer policy. This means that simply requesting a transfer does not guarantee approval; all parties involved must meet the specific requirements outlined in the transfer policy.
The transfer policy, as detailed in the FDD, includes several conditions that must be met before 360 Painting will grant approval. These conditions include ensuring that all monetary obligations to 360 Painting and its affiliates are paid in full, that none of the parties are in default of any agreements with 360 Painting, and that all parties execute a general release of claims against 360 Painting. Additionally, the transferor may be required to pay a transfer fee, which is the greater of $20,000 or 360 Painting's out-of-pocket costs to review and process the transfer. The prospective transferee must also satisfy 360 Painting's management, business, and financial standards.
Furthermore, 360 Painting requires a complete copy of all contracts and agreements between the franchisee, transferor, and prospective transferee related to the sale or transfer. The franchisor must determine that the agreements are acceptable. These stipulations give 360 Painting significant control over who becomes a franchisee and ensure that any transfer aligns with their standards and financial interests. A prospective franchisee should carefully review the transfer policy in its entirety to understand all the requirements and potential costs associated with transferring a 360 Painting franchise.