What conditions are placed on Big O Tires' approval of a proposed transferee of a Big O Tires franchise?

. Big O shall, within thirty (30) days after receipt of the notice as provided in Section 18.04(b)(i), above, notify Franchisee in writing of its approval or disapproval of the prospective Transfer and transferee. Big O's approval will be granted only if the prospective transferee, its Owners, and/or Operator: (a) meets Big O's then current standards for new franchisees, which standards need not be in writing and which standards may vary with the circumstances (such as past or anticipated sales volume or real estate value of a particular Store); (b) demonstrates to Big O's satisfaction that it or its Operator meets Big O's managerial, business, and technical standards; (c) possesses a good moral character, business reputation, and satisfactory credit rating; and (d) has the aptitude, ability, and financial capacity to operate the Franchised Business (as may be evidenced by prior related business experience or otherwise). Big O also reserves the right to disapprove a Transfer or a particular transferee where such Transfer or transferee would result in Big O having any material increased risk, burden, chance of not obtaining performance of all the provisions of this Agreement or chance of not obtaining financial performance as good as that achieved by the Franchised Business prior to the prospective Transfer. Big O also reserves the right to disallow a transfer of the Premises (without a transfer of the Franchised Business) to a person who would operate a business from the Premises which sells or offers for sale products or services which are the same as or similar to those offered for sale through the Franchised Business. Big O also reserves the right to seek to negotiate a general release of Big O as part of its approval of the proposed Transfer;

• (iii) If Big O approves the proposed transferee, Franchisee or the Owner may transfer the interest to the proposed transferee at a price and under terms and conditions which are not more favorable to the transferee than the terms offered to Big O. Big O's approval is conditioned upon the proposed transferee or its Operator having completed (to the satisfaction of Big O) the training program then currently required of Big O franchisees or Operators, and, in some circumstances (such as high past sales volume) additional training as required by Big O from time to time;

• (iv) Prior to the consummation of any such Transfer, Franchisee shall pay all amounts due to Big O and cure all other breaches of this Agreement and any other agreement or loan document it may have with Big O;
• (v) Big O will, as a condition of any Transfer involving an assignment of this Agreement or a Change in Control, require Franchisee or transferee to pay a transfer fee (but no initial franchise fee). The transfer fee will be as set by Big O from time to time (and is currently $5,000). Franchisee acknowledges that such a transfer fee is appropriate as necessary to reimburse Big O for any expenses which may be incurred in its review, analysis, and preparation of any documentation relating to the Transfer, including legal and accounting fees, and additional assistance as may be requested by the Franchisee related to the Franchisee's resale of the Store but is not determined by the actual amount of such expenses and costs. In addition, if the transferee requires training, Franchisee or the transferee will also be charged a training fee of up to five thousand five hundred dollars ($5,500) for one person plus, in Big O's discretion, a reasonable additional training fee if additional training is required as described in Section 18.04(b)(iii), plus additional training fees shall apply for additional trainees. The transferee shall be responsible for all transportation, lodging and living expenses (other than lodging expenses for the first trainee) incurred by the transferee's trainees while attending the training. Big O shall be the sole arbiter of whether a Change in Control occurred as a result of a single Transfer or a group of Transfers. For any Transfer not involving an assignment of this Agreement or a Change of Control, Big O will, as a condition of any such Transfer, require the Franchisee or the transferee to pay a transfer fee (but no initial franchise fee) equal to Big O's expenses that it incurs in its review, analysis and preparation of any documentation relating to the Transfer, including legal and accounting fees and additional assistance as may be requested by the Franchisee related to the resale of the Store, but not more than one thousand five hundred dollars ($1,500). Big O shall be the sole arbiter of whether a Change in Control will occur as a result of a single Transfer or a group of Transfers;
• (vi) Big O may require the transferor and its Owners and guarantors to guarantee the obligations of Transferee under this Agreement or under any new Franchise Agreement entered into between transferee and Big O;
• (vii) Prior to approving a Transfer involving a Change in Control, Big O may inspect Franchisee's Store and as a result of such inspection, Big O may prepare a "Punch List" setting forth the necessary repairs, maintenance, or other upgrading of the Store which will become a condition of Big O's approval of the Transfer;
• (viii) If the Franchisee, based on an applicable incentive program offered by Big O, paid less than the standard initial franchise fee (that is, the initial franchise fee charged by Big O for new franchises when the Franchisee executed this Agreement) when it acquired its interest in the Franchise, and the Franchisee within two (2) years of the Effective Date of this Agreement makes a Transfer of its interests that, if made prior to the date of this Agreement, would have disqualified it from the program allowing such lower initial franchise fee in regard to the Franchise that is the subject of this Agreement, the Franchisee must pay Big O as a condition of such Transfer the difference between the initial franchise fee paid by Franchisee and seventeen thousand five hundred dollars ($17,500.00), which is the standard initial franchisee fee charged by Big O for new franchises when Franchisee executed this Agreement; provided, however, that to the extent that the Franchisee received the lower initial franchise fee pursuant to a Converter Rider with special provisions governing payment of the balance of lower initial franchise fees on a Transfer or change in

• certain ownership criteria, those special provisions will govern in lieu of this Section 18.04(b)(viii); and
• (ix) Franchisee shall comply with all other applicable transfer requirements as designated in the Manual or otherwise in writing.
• 18.05 Death of Franchisee. Notwithstanding any other provision in this Section 18, if a Survivor desires to acquire or retain the interest of a decedent of a Franchisee or in a Franchisee and continues to operate the Franchised Business pursuant to the System, the Survivor may do so under the terms of this Agreement subject only to:
  • (a) The Survivor's execution and delivery to Big O of a written agreement to be bound:
    • (i) By the terms of this Agreement; and
    • (ii) By the terms of any guaranty of this Agreement;

Source: Item 23 — RECEIPTS (FDD pages 102–535)