Under what conditions can Benjamin Franklin Plumbing refuse a transfer of ownership of a franchise?
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 Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the company can refuse a transfer of ownership of a franchise for good cause. This aligns with standard franchise industry practices, where franchisors typically retain the right to approve franchise transfers to maintain brand standards and protect the network.
Good cause for refusal includes several specific conditions. Benjamin Franklin Plumbing can deny a transfer if the proposed transferee does not meet the company's then-current reasonable qualifications or standards. This ensures that new franchisees have the necessary skills and experience to operate the business successfully. A transfer can also be refused if the proposed transferee is a competitor of Benjamin Franklin Plumbing or its subfranchisor, preventing potential conflicts of interest and protecting proprietary information.
Additionally, Benjamin Franklin Plumbing can refuse a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations under the franchise agreement. This ensures that the new franchisee is committed to upholding the terms and conditions of the franchise. Finally, the company can refuse a transfer if the franchisee or proposed transferee has failed to pay any sums owing to Benjamin Franklin Plumbing or to cure any default in the franchise agreement existing at the time of the proposed transfer, ensuring that all financial obligations are met before the transfer is completed.
It is important to note that this does not prevent Benjamin Franklin Plumbing from exercising a right of first refusal to purchase the franchise, allowing them to maintain control over the franchise's operation and location if they choose. A prospective franchisee should carefully review the transfer provisions in the franchise agreement and discuss any concerns with Benjamin Franklin Plumbing to fully understand the conditions under which a transfer may be refused.