Can Benjamin Franklin Plumbing withhold consent for a transfer of minority ownership interest?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
o pay us a transfer fee of $10,000 ("Transfer Fee"). If the proposed transferee was referred to you or us by a third-party (e.g., a broker) with whom we have a referral arrangement, then you or the proposed transferee, as a condition of approval, must pay us an additional fee equal to the amount owed under that referral arrangement. If we identify the prospective purchaser, then in addition to the Transfer Fee, we must receive the greater of: (a) $15,000; (b) three percent (3%) of the total purchase price; or (c) our actual costs to identify the prospective purchaser. Any amounts paid pursuant to this Section are nonrefundable.
- 15.2.4 Franchisee and all Owners are required to sign a general release, in a form satisfactory to us, of all claims against us and our past, present and future affiliates, officers, directors, shareholders, agents and employees. Franchisee and the Owners will remain liable to us for all obligations arising before the effective date of the transfer.
- 15.2.5 The price and other proposed terms of the transfer mus
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the company can withhold consent for a transfer of minority ownership interest. The FDD states that for any proposal to admit a new owner, remove an existing one, change the distribution of ownership, or modify ownership in a way that doesn't result in a change of control, the franchisee must give Benjamin Franklin Plumbing advance notice and provide all requested documents and information.
Benjamin Franklin Plumbing has a reasonable time (not less than 45 days) after receiving all the necessary information to evaluate the proposed transfer. During this time, Benjamin Franklin Plumbing may withhold consent or grant it subject to conditions outlined in Section 15.2 of the agreement. However, instead of a transfer fee, Benjamin Franklin Plumbing will only charge the applicable change of ownership fee, which as of the Agreement Date, is the greater of $500 or Franchisor's external legal and administrative costs, plus applicable training fees for each new person that Benjamin Franklin Plumbing determines needs training.
This means that even for minor changes in ownership, a Benjamin Franklin Plumbing franchisee must get approval from the franchisor. Benjamin Franklin Plumbing has significant discretion over these transfers and can impose conditions. This process ensures that Benjamin Franklin Plumbing maintains control over who is involved in their franchises and that new owners meet their standards and training requirements. The franchisee should factor in these requirements and potential costs when considering changes to the ownership structure.