Can Bevaris Alliance unreasonably withhold consent for a franchisee's assignment of the agreement?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
gations under this agreement;
- (b) devote his full-time attention and effort to the Franchisee's Business;
- (c) be a director, officer, or managing member of the Franchisee; and
- (d) hold, in his or her own name, more than 50% of the issued voting capital of the Franchisee.
- 22.8 The Individual may not assign or transfer any of his rights or obligations under this agreement.
23. Assignment
- 23.1 This agreement is personal to the Franchisee and the Individual, who, subject to clause 16 and clause 17 may not, without the prior written consent of the Franchisor (such consent not to be unreasonably conditioned, withheld or delayed), assign, transfer, mortgage, charge, declare a trust of, sub-contract, delegate or deal in any other manner with:
- (a) this agreement or any of their rights and obligations under it (or any document referred to in it); or
- (b) the Franchisee's Business, or purport to do any of the same.
- 23.2 The Franchisor may, at any time, assign (absolutely or by way of security and in whole or in part), transfer, mortgage, charge or deal in any other manner with the benefit of any or all of any other party's obligations or any benefit arising under this agreement.
- 23.3 If there is an assignment pursuant to clause 23.2:
- (a) the Franchisee and Individual shall discharge their obligations under this agreement to the Franchisor until they receive written notice of the assignment;
- (b) the assignee may enforce this agreement as if it were a party to it, but the Franchisor shall remain liable for its obligations under this agreement;
- (c) the liability of the Franchisee and Individual to any assignee cannot be greater than their liability to the Franchisor;
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, a franchisee needs prior written consent from Bevaris Alliance to assign the franchise agreement. However, Bevaris Alliance cannot unreasonably condition, withhold, or delay this consent. This means that while Bevaris Alliance has the right to approve or deny a franchisee's request to transfer the agreement, they must have a legitimate and justifiable reason for doing so.
This provision protects the franchisee to some extent, preventing Bevaris Alliance from arbitrarily blocking a sale or transfer of the franchise. However, what constitutes an 'unreasonable' withholding of consent can be subjective and may lead to disputes. A prospective franchisee should seek clarity on the specific criteria Bevaris Alliance uses to evaluate assignment requests.
Bevaris Alliance, on the other hand, retains the right to assign the agreement at any time without similar constraints. This allows Bevaris Alliance to transfer its obligations or benefits under the agreement to another party, which could include a sale of the entire franchise system. The franchisee must continue to fulfill their obligations to Bevaris Alliance until they receive written notice of the assignment.
In the event of an assignment by Bevaris Alliance, the assignee can enforce the agreement as if they were Bevaris Alliance, but Bevaris Alliance remains liable for its obligations under the agreement. The franchisee's liability to any assignee cannot be greater than their liability to Bevaris Alliance. Bevaris Alliance may disclose information about the agreement to a proposed assignee after notifying the franchisee of the assignee's identity.