Are there any restrictions on the frequency of Best Western membership transfers?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 7. Cancellation or Termination; Exemptions; Automatic Transfers
- (A) Except as provided in Article II, Section 7(B) of these Bylaws, a Membership shall automatically terminate on the date of the occurrence of any one of the following events:
- (1) The Best Western Property is leased or subleased;
- (2) A lease of the Best Western Property terminates;
- (3) If the Best Western Property is not leased, a change occurs of 50% or more of the equitable ownership of the Best Western Property within a 12-month period;
- (4) A change occurs of 50% or more of the equitable ownership of a leasehold interest within a 12-month period;
- (5) If the Best Western Property is not leased, a change occurs of 50% or more of the equitable ownership of the entity or entities owning the Best Western Property within a 12-month period;
- (6) A change occurs of 50% or more of the equitable ownership of the entity or entities leasing the Best Western Property within a 12-month period.
- (7) A term or condition is not met, after the Board, having provided the Member with an opportunity for a hearing, has found grounds exist for cancellation of the Membership and the Member has been granted a conditional extension in lieu of cancellation.
- (8) A Member or Member with Conditions fails to maintain and provide proof of insurance coverage as required by the Rules and Regulations.
- (9) A term or condition is not met by a Member whose Membership Application was approved by the Board with specific requirements and time frames for compliance prior to final approval of the Membership and has been advised that failure to meet any of these requirements will be grounds for automatic cancellation.
Except for the events specified in Paragraphs (A)(7), (8) and (9) of this Article II, Section 7, a Member may request an opportunity to be heard by submitting to the Board, in writing, at least 30 days prior to the effective date of the occurrence, the reasons,
in specific detail, why the automatic termination provisions are inapplicable and the termination should not occur. The Board in its sole discretion may request the Member appear in person and provide oral testimony. The Board shall have sole discretion to determine whether an event of automatic termination will or has occurred.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to the 2025 Best Western FDD, a Best Western membership will automatically terminate under certain conditions, which could indirectly impact the frequency of transfers. Specifically, Article II, Section 7(A) of the Bylaws states that membership automatically terminates when certain events occur. These events include leasing or subleasing the Best Western property, termination of a lease, or changes of 50% or more in the equitable ownership of the property or leasehold interest within a 12-month period. These stipulations are in place to ensure that Best Western maintains control over its brand standards and the quality of its properties.
However, there are exemptions to these automatic termination rules, as detailed in Article II, Section 7(B). These exemptions cover bona fide financing transactions, changes in legal form of ownership without actual control changes, transfers to immediate family members, transfers to a bona fide lender due to default, changes in stock ownership of publicly traded corporations, and issuance of new stock or limited partnership interests before operation as a Best Western property. If a transfer falls under these exemptions and the conditions are met within 30 days, the membership transfer can proceed without automatic termination.
Additionally, Article II, Section 7(C) provides another set of exemptions from restrictions on membership transfers. These exemptions apply if the member has a passing property assessment score for the past two regular assessments, has provided the transferee with the current design report and the last three property assessment reports, the property complies with the current design program, the member is not past due on any membership conditions, and the transferor is current with all dues, fees, and assessments. In such cases, the transferee assumes all requirements applicable to the transferor without alteration, provided the corporation receives at least 30 days' written notice of the intended change in ownership.
In summary, while there aren't explicit restrictions on the frequency of membership transfers, the automatic termination clauses and the conditions for exemptions outlined in the Bylaws effectively regulate how often and under what circumstances a membership can be transferred. A prospective franchisee should carefully review these conditions and ensure compliance to facilitate a smooth transfer process.