What constitutes a controlling interest in the Apricot Lane Franchised Business that triggers specific transfer conditions?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
If FRANCHISEE and its owners are in full compliance with this Agreement, FRANCHISOR will not unreasonably withhold its approval of a transfer that meets the requirements of this Section 20.C. In all cases FRANCHISEE must provide FRANCHISOR with at least forty-five (45) days prior written notice of the proposed transfer. The proposed transferee and its owners must be individuals of good moral character (in FRANCHISOR's judgment) and otherwise meet FRANCHISOR's then-applicable standards for Specialty Store franchisees. All the transferees must agree in writing to be bound by this Agreement and guarantee. Additionally, if the transfer is of this Agreement or the entire Franchised Business or a substantial part of the assets used therein, or is a transfer of a controlling interest in the Franchised Business or the FRANCHISEE (a controlling interest being the largest ownership interest even if not a majority interest), or is one of a series of transfers which in the aggregate constitute or will effect such a transfer or a change in the controlling interest, all of the following conditions must be met prior to, or concurrently with, the effective date of the transfer:
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, a transfer of a controlling interest in the Franchised Business or the franchisee triggers specific conditions for approval. A controlling interest is defined as the largest ownership interest, even if it is not a majority interest. This definition is important because it broadens the scope of what Apricot Lane considers a transfer requiring their approval.
This means that even if a franchisee doesn't sell more than 50% of their business, a transfer of the largest ownership stake will still be subject to Apricot Lane's transfer conditions. These conditions include providing at least 45 days prior written notice, ensuring the transferee meets Apricot Lane's standards for franchisees, and obtaining a written agreement from the transferee to be bound by the franchise agreement and guarantee.
Furthermore, the FDD specifies that if the franchisee dies or becomes incapacitated, the interest must be transferred within six months to a new owner who satisfies the conditions outlined in Section 20.C. During this period, heirs or representatives can continue operating the business, provided they comply with the agreement's terms. If the heirs wish to assume the interest, they must also meet the conditions of Section 20.C, although Apricot Lane will waive the transfer fee in this case. This ensures that Apricot Lane maintains control over who operates the franchise, even in unforeseen circumstances.