Under what conditions can Best Western refuse a transfer of franchise ownership?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer or 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 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to the 2025 Best Western FDD, Best Western can refuse a transfer of ownership for 'good cause.' The definition of 'good cause' includes several specific scenarios. Best Western can refuse a transfer if the proposed new owner doesn't meet the brand's current qualifications or standards. This implies that potential buyers must satisfy certain criteria related to financial stability, experience, and operational capabilities to be approved.
Additionally, Best Western can block a transfer if the proposed owner is a competitor. This is a standard practice in franchising to prevent competitors from gaining access to Best Western's operational methods, customer data, or market strategies. The FDD also states that Best Western can refuse a transfer if the potential new owner is unwilling to commit in writing to follow all legal obligations. This ensures that any new franchisee is legally bound to adhere to the franchise agreement and all applicable laws.
Finally, Best Western can prevent a transfer if the current franchisee or the proposed new franchisee owes money to Best Western or has failed to fix any existing defaults under the franchise agreement at the time of the proposed transfer. This protects Best Western's financial interests and ensures that any outstanding issues are resolved before a transfer is completed. However, the FDD notes that these restrictions do not prevent Best Western from exercising a right of first refusal to purchase the franchise.