In Michigan, under what conditions can Bee Organized refuse a transfer of ownership of a franchise?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
- G.
A provision that permits us to refuse to permit a transfer of ownership of a franchise, except for good cause.
The subdivision does not prevent us from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
(i) The failure of the proposed transferee to meet our then current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is our or Sub-franchisor's competitor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) Your or proposed transferee's failure to pay us any sums or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, Michigan franchisees have specific protections regarding the transfer of ownership. Bee Organized can only refuse a transfer if there is "good cause." This stipulation prevents Bee Organized from arbitrarily denying a transfer.
The FDD outlines specific instances that constitute "good cause". These include if the proposed transferee doesn't meet Bee Organized's current qualifications or standards, if the transferee is a competitor of Bee Organized, or if the transferee is unwilling to comply with all lawful obligations. Additionally, failure by the current franchisee or the proposed transferee to pay any sums due to Bee Organized or to resolve any existing default in the Franchise Agreement also constitutes good cause for refusal.
It is important to note that Bee Organized retains the right of first refusal to purchase the franchise. This means that even if a proposed transferee meets all qualifications, Bee Organized can still block the transfer by choosing to buy the franchise themselves. This provision is fairly standard in franchising, allowing the franchisor to maintain control over the brand and its franchisees.