Can the franchise agreement executed by the transferee of an All States M.E.D. franchise be substantially different from the original agreement?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
ny representations regarding the Franchise or the business conducted pursuant thereto or any other matter that may have been made to the transferee by Franchisee;
- (g) Franchisee has provided Franchisor with a complete copy of all contracts and agreements and related documentation between Franchisee and the prospective transferee relating to the intended sale or transfer of the Franchise;
- (h) Franchisee, or the transferee, has paid to Franchisor, before the transaction is completed, a transfer fee in the amount of $15,000;
- (i) the transferee, or all holders of a legal or beneficial interest in the transferee, has agreed to be personally bound jointly and severally by all provisions of this Agreement for the remainder of its term by executing a personal guaranty in such form as prepared by Franchisor;
- (j) the transferee has obtained all necessary consents and approvals by third parties and all applicable federal, state, and local laws, rules, ordinances, and requirements applicable to the transfer have been complied with or satisfied;
- (k) Franchisee has, and if Franchisee is an entity, all of the holders of a legal and beneficial interest in Franchisee have executed and delivered to Franchisor a nondisclosure and non-competit
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, a franchise can be transferred if certain conditions are met. One of these conditions is that the transferee must agree to be personally bound by all the provisions of the existing Franchise Agreement for the remainder of its term. This is achieved through the execution of a personal guaranty in a form prepared by All States M.E.D.
This requirement ensures that the transferee is legally obligated to uphold the terms and conditions of the original franchise agreement. By signing a personal guaranty, the transferee commits to fulfilling all responsibilities and obligations outlined in the agreement, preventing them from altering or deviating from the established terms.
In addition to the personal guaranty, the transferee must also complete a training program similar to the initial training, to the satisfaction of All States M.E.D., before they can manage the daily operations of the franchised business. This ensures that the transferee is adequately prepared to operate the All States M.E.D. franchise according to the franchisor's standards and procedures. The transferee also needs to pay a $15,000 transfer fee to All States M.E.D. before the transaction is completed.
These stipulations collectively ensure that the franchise agreement remains consistent and enforceable, even after the transfer of ownership. The new franchisee cannot substantially alter the original agreement.