In Michigan, can Beehive Homes refuse a transfer of ownership of a franchise without good cause?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent a franchisor 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 the franchisor's then current reasonable qualifications or standards. (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor. (iii) The unwillingness of the proposed transferee to agree in writing
to comply with all lawful obligations. (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, Michigan law impacts the ability of Beehive Homes to refuse a transfer of ownership. Specifically, Michigan prohibits franchise agreement provisions that allow Beehive Homes to refuse a transfer of ownership of a franchise except for good cause. This means that Beehive Homes cannot arbitrarily deny a franchisee's request to transfer their franchise to another party in Michigan.
The FDD defines 'good cause' as including, but not limited to, several factors. These include the proposed transferee's failure to meet Beehive Homes' current reasonable qualifications or standards, the proposed transferee being a competitor of Beehive Homes, or the proposed transferee's unwillingness to agree in writing to comply with all lawful obligations. Additionally, good cause exists if the franchisee or proposed transferee fails to pay any sums owing to Beehive Homes or to cure any default in the franchise agreement at the time of the proposed transfer.
This protection under Michigan law ensures that Beehive Homes franchisees are not unreasonably restricted from selling their business. However, it's important to note that Beehive Homes retains the right to refuse a transfer if legitimate concerns exist regarding the transferee's qualifications, financial stability, or willingness to adhere to the franchise agreement. Furthermore, this does not prevent Beehive Homes from exercising a right of first refusal to purchase the franchise.