Is the sale of voting stock of the Apricot Lane franchisee considered a 'transfer' requiring approval?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE understands and acknowledges that the rights and duties created by this Agreement are personal to FRANCHISEE and its owners and that FRANCHISOR has granted the franchise to FRANCHISEE in reliance upon the individual or collective character, skill, aptitude, attitude, business ability and financial capacity of FRANCHISEE and its owners. Accordingly, neither this Agreement nor the franchise (or any interest therein), nor any part or all of the ownership of FRANCHISEE or the Franchised Business (or any interest therein), may be transferred without the prior written approval of FRANCHISOR, and any such transfer without such approval shall constitute a breach hereof and convey no rights to or interest in this Agreement, the franchise, FRANCHISEE, or the Franchised Business. As used in this Section 20, a "transfer" by FRANCHISEE includes the voluntary, involuntary, direct or indirect assignment, sale, gift or other transfer of any interest in: (i) this Agreement; (ii) the franchise; (iii) the ownership of FRANCHISEE; or (iv) the Franchised Business or a substantial part of the assets used in the Franchised Business and includes any transfer of ownership of capital stock or partnership interest; merger or consolidation or issuance of additional securities representing an ownership interest in FRANCHISEE; any sale of voting stock of FRANCHISEE or any security convertible to voting stock of FRANCHISEE, transfer of an interest in FRANCHISEE, this Agreement, the franchise or the Franchised Business in a divorce, insolvency, corporate or partnership dissolution proceeding or otherwise by operation of law; or transfer of an interest in this Agreement, the franchise, FRANCHISEE, or the Franchised Business in the event of the death of FRANCHISEE or an owner, by will, declaration of or transfer in trust, or under the laws of intestate succession.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the sale of voting stock is considered a transfer that requires franchisor approval. The FDD states that the rights and duties within the agreement are personal to the franchisee and its owners. Apricot Lane grants the franchise based on the character, skills, aptitude, business ability, and financial capacity of the franchisee and their owners.
Therefore, neither the agreement nor the franchise, ownership, or franchised business can be transferred without prior written approval from Apricot Lane. The document defines 'transfer' broadly, including any direct or indirect assignment, sale, gift, or other transfer of interest in the agreement, the franchise, the ownership of the franchisee, or the franchised business assets.
Specifically, the definition of 'transfer' includes the sale of voting stock of the franchisee or any security convertible to voting stock. This means that if a franchisee intends to sell voting stock in their Apricot Lane franchise, they must obtain written approval from Apricot Lane beforehand. Failure to do so constitutes a breach of the agreement and conveys no rights to the transfer.