What happens if a proposed All County transferee is a competitor of the franchisor?
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, the franchisor can refuse a franchise transfer if the proposed transferee is a competitor. Specifically, All County is permitted to refuse a transfer of ownership for good cause.
Good cause includes several factors, and one of them is if the proposed transferee is a competitor of All County or its subfranchisor. This clause protects All County from having its proprietary information and business practices fall into the hands of a direct competitor through a franchise transfer.
This provision is fairly standard in franchising. It ensures that All County retains control over who operates under its brand and prevents potential conflicts of interest. A prospective franchisee should understand that if they ever decide to sell their All County franchise, the pool of potential buyers may be limited by this clause.