What section of the Apricot Lane franchise agreement outlines the requirements for transferring the franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
ut FRANCHISEE's prior consent; provided that, in respect to any assignment resulting in the subsequent performance by the assignee of the functions of FRANCHISOR, FRANCHISOR shall determine in good faith if the assignee shall be financially responsible and economically capable of performing the obligations of FRANCHISOR hereunder; and the assignee shall expressly assume and agree to perform such obligations.
B. Transfer by FRANCHISEE
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.
C. Conditions for Approval of Transfer
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.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, Section 20 of the franchise agreement details the requirements for transferring the franchise. Specifically, Section 20.B addresses transfer by the franchisee, emphasizing 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, business ability, and financial capacity of the franchisee and their owners. Therefore, any transfer of the agreement, the franchise, ownership of the franchisee, or the franchised business requires prior written approval from Apricot Lane. A transfer without this approval constitutes a breach of the agreement.
The definition of "transfer" in Section 20 includes various scenarios such as voluntary, involuntary, direct, or indirect assignments, sales, gifts, or other transfers of interest in the agreement, the franchise, the ownership of the franchisee, or a substantial part of the assets used in the franchised business. This also encompasses any transfer of ownership of capital stock or partnership interest, merger or consolidation, or issuance of additional securities representing an ownership interest in the franchisee.
Section 20.C outlines the conditions for approval of a transfer. Apricot Lane will not unreasonably withhold approval if the franchisee and its owners are in full compliance with the agreement and the transfer meets the specified requirements. The franchisee must provide at least 45 days prior written notice of the proposed transfer. The proposed transferee and their owners must be of good moral character and meet Apricot Lane's standards for franchisees. All transferees must agree in writing to be bound by the agreement and guarantee its terms. Additional conditions apply if the transfer involves the agreement, the entire franchised business, a substantial part of its assets, or a controlling interest in the business or the franchisee. These conditions must be met before or concurrently with the transfer's effective date.