What options does Bath Tune Up have upon receiving notice of a proposed transfer from a franchisee?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
the ownership interests or voting power in Franchisee will be considered to be a Transfer for purposes of this Section 9.
9.3. Right of First Refusal
Except as provided in Sections 9.4, 9.5, and 9.6, the right of Franchisee or its Equity Holders to Transfer any interest in this Franchise Agreement will be subject to Franchisor's right of first refusal with respect thereto. Franchisor may exercise the right of first refusal in the following manner:
- (a) Franchisee will deliver to Franchisor a written notice setting forth (i) all of the terms and conditions of any bona fide offer relating to a proposed Assignment by Franchisee, and (ii) all available information concerning the proposed assignee of the interest proposed to be subject to a Transfer.
- (b) Within ten days after Franchisor's receipt of the notice (or if Franchisor requests additional information, within ten days after receipt of the additional information), Franchisor may either consent or withhold its consent to the Transfer, in accordance with Section 9.2 or, at its option, may accept the Transfer itself or on behalf of its nominee upon the terms and conditions specified in the notice.
- (c) If Franchisor elects not to exercise the right of first refusal and consents to the Transfer, Franchisee will for a period of 90 days, and subject to the provisions of Section 9.2, be free to complete the proposed Transfer upon the terms and conditions specified in the notice. If, however, the terms are materially changed, or if the 90-day period expires, Franchisor will again have the right of first refusal with respect to the offer and Franchisee will again be required to comply with Section 9.3(a) above.
9.4. Transfers to Family Members
An individual Franchisee or an Equity Holder, may with Franchisor's consent, which will not be unreasonably withheld, Transfer the Franchised Business or an equity interest in Franchisee to the person's spouse, parent, sibling, niece, nephew, descendant, or spouse's descendant provided that adequate provision is made for the management of the Franchised Business and the transferor guarantees, in form and substance satisfactory to Franchisor, the performance of the transferee's obligations under this Agreement.
9.5. Transfers to Affiliated People
Franchisee or an Equity Holder may, without the consent of Franchisor, upon 30 days prior written notice to Franchisor, Transfer the Franchised Business or an equity interest in Franchisee to a person (other than an individual) entirely owned by natural person(s) making the Transfer in the same proportionate amount of ownership as before the Transfer, provided that adequate provision is made for the management of the Franchised Business and that the transferor guarantees, in form and substance satisfactory to Franchisor, the performance of the transferee's obligations under this Agreement. No transfer fee will be payable in respect of a Transfer under this section.
9.6. Transfers Upon Death or Incapacity
In spite of any of the foregoing, upon the death or legal incapacity of Franchisee or an Equity Holder that is an individual, the person's interest in this Agreement or its equity interest in the Franchisee will Transfer in accordance with the person's will or, if the person dies intestate, in accordance with laws of intestacy governing the distribution of the person's estate, provided that adequate provision is made for the management of the Franchised Business and the transferee is one or more of the decedent's spouse, parents, siblings, nieces, nephews, descendants, or spouse's descendants.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, if a franchisee proposes a transfer, Bath Tune Up has several options. Bath Tune Up can choose not to exercise its right of first refusal, or if that right isn't applicable, it can withhold or set conditions on its consent to the transfer as it sees fit based on the transfer's circumstances. Bath Tune Up can refuse consent if it believes the transfer's terms and conditions wouldn't benefit Bath Tune Up, the potential new franchisee, or the Bath Tune Up system.
Bath Tune Up will consider the impact of the transfer and the prospective franchisee on the reputation or business operations of the franchised business, the brand, or Bath Tune Up itself. Bath Tune Up can also require that the proposed new franchisee complete a franchise application and that both the current and prospective franchisees fully disclose the terms of the proposed transfer in writing.
Additionally, Bath Tune Up can require the proposed new franchisee to demonstrate they possess the necessary skills, qualifications, and economic resources to operate the business. This includes experience in the bathroom improvement business, financial and operational skills, sufficient economic resources, and a good reputation. The prospective franchisee must also demonstrate the ability to fully and faithfully conduct the franchised business as outlined in the agreement.
Furthermore, the Bath Tune Up franchisee must provide written notice to Bath Tune Up that includes all terms and conditions of any legitimate offer related to a proposed assignment, along with all available information about the potential new franchisee. Within ten days of receiving this notice (or additional information if requested), Bath Tune Up can either consent to or withhold consent for the transfer, or it can choose to accept the transfer itself or through a nominee under the terms specified in the notice. If Bath Tune Up doesn't exercise its right of first refusal and consents to the transfer, the franchisee has 90 days to complete the transfer under the specified terms. If the terms change materially or the 90-day period expires, Bath Tune Up regains the right of first refusal.