Under what conditions are restrictions placed on the sale of a Bevaris Alliance franchise business?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
16.1 Restrictions on sale of franchise business. No transfer of any shares in the Franchisee by the Individual or of the Franchisee's Business or any material part of the assets, rights or properties comprising the Franchisee's Business, other than sales to Customers in the normal course by the Franchisee or the creation of any encumbrance over the shares in the Franchisee by the Individual or over any part of the Franchisor's Business by the Franchisor or Individual may take place otherwise than in accordance with this clause 16 and clause 17.
16.2 Share transfer notice. If the Individual wishes to transfer its shares in the Franchisee (Sale Shares) to a third party and has received an offer from a bona fide third-party purchaser for the Sale Shares, the Individual must first give a Transfer Notice to the Franchisor (giving details of the proposed transfer including):
(a) the name of the proposed purchaser; and
(b) the price (in cash) that the proposed purchaser has offered to pay for the Sale Shares (Proposed Sale Price).
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, there are specific restrictions on the sale of a franchise business. The sale of shares in the Franchisee company by the Individual, or the sale of the Franchisee's Business assets, rights, or properties, cannot occur unless it complies with clause 16 and clause 17 of the franchise agreement. This excludes normal sales to customers or the creation of encumbrances.
If the Individual wishes to transfer shares in the Franchisee company, they must first provide a Transfer Notice to Bevaris Alliance. This notice must include details of the proposed transfer, such as the name of the potential purchaser and the price offered for the shares. This Transfer Notice initiates a process where Bevaris Alliance has the opportunity to review and potentially approve or reject the proposed transfer, ensuring that any new owner meets their standards and requirements.
These restrictions are typical in franchising, as franchisors like Bevaris Alliance want to maintain control over who operates their branded businesses. By requiring notice and approval, Bevaris Alliance can protect its brand and ensure that new franchisees are qualified and committed to upholding the standards of the franchise system. Prospective franchisees should carefully review clauses 16 and 17 of the franchise agreement to fully understand the conditions and procedures for selling their Bevaris Alliance franchise.