Does the definition of 'transfer' by an All Team franchisee include an ownership change?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
- O. "Transfer" means and includes any voluntary or involuntary, direct or indirect, assignment, sale, gift, conveyance, lease or other disposition of an interest in this Agreement, FRANCHISEE or the Agency, including: (a) transfer of any capital stock, partnership interest, limited liability company interest or other ownership interest; (b) merger, consolidation, reorganization, business combination or other issuance of additional stock or ownership interests; (c) transfer in bankruptcy or dissolution of marriage or otherwise by operation of law or by order of court; (d) transfer to a personal representative upon disability or transfer upon the death of a Principal Owner; (e) the grant or creation of any lien or encumbrance on any ownership interest or asset; (f) the grant of any option, call, warrant, conversion rights or rights to acquire any equity or voting interest; (g) assignment of contract rights; (h) sale of assets (including the inventory, furniture, fixtures, equipment and other operating assets of the Agency, other than in ordinary course of business); or (i) any change of control or management of the Agency.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 28–30)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the definition of 'transfer' does include changes in ownership. The FDD specifies that 'transfer' encompasses any disposition of interest in the franchise agreement, the franchisee, or the agency, whether voluntary or involuntary, direct or indirect. This broad definition explicitly includes the transfer of capital stock, partnership interest, limited liability company interest, or other ownership interest.
For a prospective All Team franchisee, this means that any change in who owns the business, whether through a sale, gift, or other means, is considered a transfer under the franchise agreement. This also extends to changes resulting from events like mergers, consolidations, reorganizations, or the issuance of additional stock or ownership interests. Even transfers occurring due to bankruptcy, dissolution of marriage, or upon the death or disability of a principal owner are included.
Furthermore, the definition covers actions that might not be immediately obvious as transfers, such as granting a lien or encumbrance on any ownership interest or asset, granting options or rights to acquire equity, assigning contract rights, or selling assets outside the ordinary course of business. Critically, any change of control or management of the agency also constitutes a transfer. This comprehensive definition ensures that All Team retains control over who operates its franchises and can approve or disapprove any changes in ownership or management.
This clause is significant because All Team must approve any transfer, and specific conditions must be met, including governmental compliance, the franchisee's prior compliance with the agreement, satisfaction of obligations to All Team, execution of a general release, and the transferee meeting All Team's standards for new franchisees. A transfer fee may also be required, potentially up to 50% of the current franchise fee. This level of detail is typical in franchise agreements to protect the brand and ensure consistent operation across all franchise locations.