What happens if the majority of the equity of an All Team franchisee is transferred?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
against the Indemnitees in any way arising out of the acts or omissions of USER or its employees, agents, officers, directors, parents, subsidiaries, affiliates, successors and assigns ("Indemnitors") pursuant to or relating to this Agreement or the transactions or relationships contemplated hereby or a breach or default by USER under this Agreement regardless of whether the Indemnities were negligent or that said negligence was a contributing factor in the liability.
- E. Assignment. This Processing Agreement is personal to USER and shall not be assignable or transferable by USER, in whole or in part, either voluntarily or by operation of law, except with the prior written consent of ATFC, which consent shall not unreasonably be withheld. For all purposes of this Processing Agreement, the transfer of the majority of the equity of USER to persons other than the present owners thereof, or of any substantial portion of the Business in one or more transactions, shall be deemed an assignment of this Processing Agreement requiring such consent. Any assignment must be in conjunction with a corresponding assignment under the Franchise Agreement. This Processing Agreement is fully assignable by ATFC.
- F. Successors and Assigns. This Processing Agreement shall be binding upon and shall inure to the benefit of ATFC and USER, and their permitted successors and assigns.
- G.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, a transfer of the majority of the equity in the franchise to someone other than the current owners is treated as an assignment of the Processing Agreement and Funding Agreement. This means that the franchisee needs to obtain prior written consent from All Team for the transfer to proceed. All Team's consent cannot be unreasonably withheld.
This requirement ensures that All Team maintains control over who operates its franchises and has the opportunity to assess the qualifications of any potential new owners. It is a fairly standard practice in franchising to require franchisor approval for the transfer of ownership, as the success of the franchise system depends on having qualified and capable franchisees.
Furthermore, any assignment of the Processing Agreement and Funding Agreement must occur in conjunction with a corresponding assignment under the Franchise Agreement. This implies that the franchisee must also seek All Team's approval for the transfer of the Franchise Agreement itself, ensuring a comprehensive review of the proposed change in ownership. Prospective franchisees should carefully review the terms and conditions related to assignment and transfer in the Franchise Agreement to fully understand their obligations and the franchisor's rights.