Is the grant of a mortgage considered a 'transfer' of a Bee Organized franchise?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
| j. | Assignment | 14.A. | No restriction on our right to assign. |
|---|---|---|---|
| of the contract by franchisor | |||
| k. | "Transfer" by franchisee definition | 14.B. | A transfer means and includes, whether voluntary or involuntary, conditional or unconditional, direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; and (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee. |
| l. | Franchisor's approval of transfer by franchisee | 14.B. | Transfers require our prior written consent, which may be granted or withheld in our discretion. |
| m. | Conditions for franchisor's approval of transfer | 14.C. | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners and their spouses must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferee's continued use and occupancy of such location throughout the term of the Franchise Agreement; the assets of the Franchised Business must be transferred to the transferee; the transferee and the transferee's owners and managers, at the transferee's expense, must complete our training programs; we waive our right of first refusal; we approve of the transfer and |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 35–40)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, the grant of a mortgage is considered a transfer of the franchise. The FDD specifies that the definition of a 'transfer' includes, whether voluntary or involuntary, the grant of a mortgage, charge, lien, or security interest. This also includes the grant of a collateral assignment. Therefore, franchisees need to be aware that securing a loan using the franchise as collateral is subject to the franchisor's transfer policies.
Bee Organized requires prior written consent for any transfer, which the franchisor may grant or withhold at their discretion. This means that if a franchisee wants to obtain a mortgage or any other type of security interest that involves the franchise, they must first seek and obtain approval from Bee Organized. This approval process gives Bee Organized control over who has a financial interest in the franchise and ensures that any such arrangement aligns with their standards and policies.
To gain approval for a transfer, Bee Organized requires the franchisee to provide 30 days' prior written notice. Additionally, the franchisee and their owners must be in full compliance with all obligations under the Franchise Agreement and any other agreements with Bee Organized. The transferee must agree to be bound by all the terms of the Franchise Agreement, and their owners and spouses must personally guarantee these terms. Furthermore, the franchisee, owners, and their spouses must sign a general release in favor of Bee Organized. These conditions ensure that any transfer, including the grant of a mortgage, is carefully controlled and that the franchisor's interests are protected.