What constitutes 'good cause' for All County to refuse a transfer of ownership?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, All County can refuse a transfer of ownership of a franchise for 'good cause'. This includes several specific situations that protect All County's interests and ensure the continued quality of its franchise system.
'Good cause' includes the proposed transferee's failure to meet All County's current reasonable qualifications or standards. This means that anyone seeking to buy an existing All County franchise must demonstrate they have the skills, experience, and financial resources to operate the business successfully. It also covers situations where the proposed transferee is a competitor of All County, preventing potential conflicts of interest and protecting All County's competitive advantage. The refusal can also occur if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations of the franchise agreement, ensuring that new owners are bound by the same terms and conditions as the original franchisee.
Furthermore, All County can refuse a transfer if the franchisee or proposed transferee has not paid all sums owing to All County or has failed to correct any existing default in the franchise agreement at the time of the proposed transfer. This protects All County from financial losses and ensures that franchisees meet their contractual obligations before transferring ownership. However, this does not prevent All County from exercising its right of first refusal to purchase the franchise itself.