Can Beehive Homes unreasonably withhold approval of a transfer by the franchisee?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | FRANCHISE AGREEMENT SECTION | SUMMARY |
|---|---|---|
| a. Length of the franchise | Section 5.1 | ten years |
| term | ||
| b. Renewal or extension of | Section 5.2 | additional ten year renewal periods if you |
| the term | are in good standing | |
| c. Requirements for franchisees to renew or extend | Section 5 | three to nine month advance notice, approval by US, and signing by YOU of the current form of franchise agreement, which may have materially different terms and conditions from your initial franchise agreement |
| d. Termination by YOU | Not Applicable | Not Applicable |
| e. Termination by US without | Not Applicable | Not Applicable |
| cause | ||
| f. Termination by US with cause | Section 14 | WE can terminate if YOU commit certain events of default or other breaches of the Franchise Agreement |
| g. "Cause" defined - curable defaults | Section 14.1 | YOU have 30 days to cure: nonpayment of fees, nonperformance of franchise agreement where performance can be completed |
| h. “Cause” defined - non- curable defaults | Section 14.1 | non-curable defaults: bankruptcy (may not be enforceable under federal bankruptcy law), unauthorized transfers, abandonment, trademark misuse |
| i. YOUR obligations on termination/nonrenewal | Section 14.4; 14.5; 14.6 & 14.7 | pay amounts due; sell Home to Franchisor |
| j. Assignment of contract by | Section 13.1 | Assignee reasonably willing and able to |
| US | perform | |
| k. "Transfer" by YOU - | Section 2.20; | includes transfer of contract or assets and |
| defined | 13.2 | change in ownership |
| l. OUR approval of transfer | Section 13.4 | prior written approval but not |
| by YOU | unreasonably withheld | |
| m. Conditions for OUR | Section 13.4 | payment of fees, new franchise |
| approval of transfer | agreement, training |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 25–27)
What This Means (2025 FDD)
According to Beehive Homes's 2025 Franchise Disclosure Document, Beehive Homes's prior written approval is required for a franchisee to transfer their franchise. However, Beehive Homes cannot unreasonably withhold this approval.
This provision protects franchisees from arbitrary denials of transfer requests. It means that Beehive Homes must have a legitimate, justifiable reason if they refuse to approve a proposed transfer. This is a fairly standard clause in franchise agreements, as it balances the franchisor's need to maintain brand standards with the franchisee's right to eventually sell their business.
However, the FDD also states that there are conditions for Beehive Homes's approval of a transfer, including payment of fees, a new franchise agreement with the assignee, and training for the assignee. These conditions must be met for the transfer to be approved. A prospective franchisee should carefully review Section 13.4 of the Franchise Agreement to fully understand the requirements for transfer approval.