What are some examples of 'good cause' for Benjamin Franklin Plumbing to refuse a transfer of ownership?
Benjamin_Franklin_Plumbing 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 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing has the right to refuse a transfer of ownership of a franchise for 'good cause'. This right is in place to ensure that any new franchisee meets the standards and obligations of the franchise system.
Examples of 'good cause' include situations where the proposed transferee does not meet Benjamin Franklin Plumbing's current qualifications or standards. This could relate to financial stability, business experience, or other criteria deemed important for successful franchise operation. Another instance of 'good cause' is if the proposed transferee is a competitor of Benjamin Franklin Plumbing, which could create conflicts of interest or undermine the franchise's competitive position.
Additionally, Benjamin Franklin Plumbing can refuse a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations outlined in the franchise agreement. This ensures that the new franchisee is committed to upholding the terms and conditions of the franchise. Finally, failure of the franchisee or proposed transferee to pay any outstanding sums to Benjamin Franklin Plumbing or to resolve any existing defaults in the franchise agreement also constitutes 'good cause' for refusing the transfer. This protects the financial interests of the franchisor and the integrity of the franchise system.
It is important to note that this provision does not prevent Benjamin Franklin Plumbing from exercising a right of first refusal to purchase the franchise, meaning they have the option to buy the franchise themselves before allowing a transfer to a third party.