What constitutes an Unauthorized Transfer under the Beehive Homes Franchise Agreement?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
Any Transfer in violation of this Section shall be an Unauthorized Transfer.
- 13.5. Unauthorized Transfer. If Franchisee engages in an Unauthorized Transfer as provided in Section 13.2 or Section 13.6, Franchisee hereby covenants and promises to pay to Franchisor, in addition to all other costs and expenses provided for in this Agreement, an additional transfer fee in an amount equal to ten (10) times [5% times [12 times [the greater of (i) the average published monthly rate per resident of the Home during the 12 months preceding the Unauthorized Transfer, times the number of beds in the Home, or (ii) the average published monthly rate per resident of the home which has been in operation for the preceding 18 month and is in nearest geographic proximity to the Home , times the number of beds in the Home]]]. The parties hereto agree that this additional transfer fee is not a penalty, but the parties' best estimate of the anticipated damage to Franchisor resulting from the Unauthorized Transfer.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, an Unauthorized Transfer occurs when any transfer violates Section 13.2 or Section 13.6 of the Franchise Agreement.
If a franchisee engages in an Unauthorized Transfer, they must pay Beehive Homes an additional transfer fee. This fee is calculated as ten times the product of 5%, 12, and the greater of two averages: (i) the average published monthly rate per resident of the Home during the 12 months preceding the Unauthorized Transfer, times the number of beds in the Home, or (ii) the average published monthly rate per resident of a home which has been in operation for the preceding 18 months and is in nearest geographic proximity to the Home, times the number of beds in the Home. Beehive Homes states that this additional transfer fee is not a penalty but is the parties' best estimate of the anticipated damage to Beehive Homes resulting from the Unauthorized Transfer.
For a prospective Beehive Homes franchisee, it's crucial to understand the conditions under which a transfer is considered unauthorized, as engaging in such a transfer can result in significant financial penalties. Franchisees should carefully review Sections 13.2 and 13.6 of the Franchise Agreement to ensure compliance and avoid triggering these fees. It is also important to note that Beehive Homes retains the right to examine and copy records related to any transfer.