Are there any exceptions to the Beehive Homes franchisee's restriction on transferring equity interest?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
Permitted Transfers. Franchisee, and if Franchisee is a corporation or other legal entity, its Equity Owner(s) (or any transferee Equity Owner approved by Franchisor), may engage in Permitted Transfers, as defined in this Section 13.3, only if: (i) all such Permitted Transfers do not in the aggregate result in a change of Control of the Franchisee, an Equity Interest or the Home; (ii) Franchisee or its Equity Owner(s) delivers to Franchisor, at least thirty (30) days prior to the proposed Permitted Transfer, a written notice (the "Permitted Transfer Request") which includes the identity and contact information for all proposed transferees and any other information Franchisor may require in order to review the proposed Permitted Transfer; (iii) Franchisee or its EquityOwner(s) pays to Franchisor a nonrefundable processing fee of Two Thousand Five Hundred Dollars ($2,500.00) with the Permitted Transfer Request; and (iv) Franchisee or its EquityOwner(s) complies with Franchisor's then current procedure for processing Permitted Transfers, including the execution of all documents required by Franchisor, including the then current form of Franchise Agreement in use by the Franchisor, for the assumption by proposed transferees of all duties and
obligations of the transferor relating to this Agreement, the Home and any other agreements between Franchisor and transferor. Permitted Transfer shall mean:
- (a) Affiliate Transfer. Franchisee or, if Franchisee is a corporation or other legal entity its Equity Owner(s), mayTransfer an Equity Interest to an Immediate Family Member of Franchisee, or to another Equity Owner or to an Immediate Family Member of another Equity Owner, provided that such transfer does not relieve the transferring Equity Owner of any obligations under this Agreement or Equity Owner's Guarantee and Assumption of Obligations of this Agreement.
- (b) Trust Transfer. Franchisee or, if Franchisee is a corporation or other legal entity its Equity Owner(s), may Transfer an Equity Interest to a grantor trust (a defined in the Internal Revenue Code of 1986, as amended) provided the transferor or the transferor and the transferor's spouse are the sole trustees of the grantor trust and the transferor and transferor's Immediate Family Members are the sole beneficiaries of the grantor trust.
- (c) Transfer On Death. Upon the death of Franchisee or, if Franchisee is a corporation or other legal entity an Equity Owner, the Equity Interest of the deceased Franchisee or Equity Owner may be Transferred in accordance with such person's will or, if such person dies intestate, in accordance with laws of intestacy governing the distribution of such person's estate, provided that: (i) the transfer on death is to an Immediate Family Member(s) or to a legal entity formed and owned by such Immediate Family Member(s); (ii) within six (6) months after the date of death, such Immediate Family Member(s), or a legal entity formed and owned by such Immediate Family Member(s), meets all of Franchisor's then current requirements for new franchisees and approval by Franchisor, which approval may not be unreasonably withheld; and (iii) such Immediate Family Member(s) or a legal entity formed and owned by such Immediate Family Member(s) signs the Franchisor's then current form of Franchise Agreement, and if the legal entity formed and owned by the Immediate Family Member(s) signs the Franchise Agreement, the Immediate Family Member(s) shall sign the Franchisor's Guarantee and
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, franchisees face restrictions on transferring equity interests, but there are specific exceptions outlined as 'Permitted Transfers.' These include Affiliate Transfers, where equity can be transferred to immediate family members or other equity owners without relieving the transferring owner of their obligations. Trust Transfers are also permitted, allowing transfers to grantor trusts under certain conditions, such as the transferor being the sole trustee and the beneficiaries being immediate family members.
Another exception is a Transfer On Death, which allows the equity interest of a deceased franchisee or equity owner to be transferred according to their will or intestacy laws. However, this is contingent upon the transfer being to immediate family members or a legal entity owned by them, and the transferee meeting Beehive Homes' current requirements for new franchisees within six months of the death. They must also sign the current franchise agreement and, if applicable, the Guarantee and Assumption Agreement.
Beehive Homes also outlines conditions for transfers to corporations, partnerships, and limited liability companies. These transfers require Beehive Homes' prior written consent, and restrictions are placed on further transfers or assignments of the franchise, pledges or encumbrances, and changes to equity interests or organizational documents. These stipulations ensure that Beehive Homes maintains control over who becomes involved in the franchise and that the standards and obligations of the franchise agreement are upheld, even in cases of transfer.