What must a Big O Tires franchisee do if they desire to make a transfer of their franchise?

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Any Transfer that does not comply with the terms of this Section 18 shall be null and void.

• 18.04 Pre-Conditions to Franchisee's Assignment. If Franchisee or any Owner desires to make a Transfer, such person or Entity must comply with the following terms, conditions, and procedures to effectuate a valid Transfer:
  • (a) If any proposed assignment of any rights under this Agreement, or if any other Transfer would in the reasonable opinion of Big O result in a Change of Control:
    • (i) The transferee must apply for a Big O franchise and must meet all of Big O's then current standards and requirements for becoming a Big O franchisee, which standards and requirements need not be written and which standards may vary with the circumstances (such as past or anticipated sales volume or real estate value of a particular Store).
    • (ii) The transferee or Franchisee shall, at Big O's election, execute the then current form of Franchise Agreement generally being offered to franchisees in the State in which the Big O Store is located. Such agreement shall generally provide for a new term equal to the term of the standard Big O franchise agreement then being offered, and may include, among other matters, a different fee structure, increased fees, different terms and conditions, a modified Trade Area and different purchase requirements;
    • (iii) The transferee, Franchisee, and Big O shall execute an Agreement and Consent to Assignment of Big O Tires Store in the form then in use by Big O;
    • (iv) Notwithstanding the foregoing, Big O or its assignee may, within thirty (30) days after receipt of notice as provided in Section 18.04(b)(i), below, elect the Option to purchase the interest being offered by Franchisee or any Owner at the same terms, conditions and fees set forth in such notice; and
    • (v) The transferee or Franchisee shall, at Big O's election, have obtained prior to the Transfer a surety bond or letter of credit in an amount specified by Big O or a Local Group designated by Big O from time to time for each Big O Store of Franchisee issued by a

surety company or bank reasonably acceptable to Big O in favor of Big O or, at Big O's election, to the Local Group, which surety bond or letter of credit may not be revoked, terminated or modified until two years (or such other time period as designated by Big O from time to time) after the date of the Transfer. Such bond or letter of credit shall be payable to the order of Big O or the Local Group, as the case may be, for any nonpayment by the transferee or Franchisee of contributions due to the National Marketing Program or the Local Fund pursuant to the Franchise Agreement to which the transferee or Franchisee is a party; or

• (b) Regardless of the degree of control which would be affected by a proposed Transfer:
  • (i) Franchisee shall first notify Big O in writing of any bona fide proposed Transfer and set forth a complete description of all terms, conditions and fees of the proposed Transfer in the manner prescribed by Big O, including the name, address, financial qualifications, and previous five (5) years business experience of the prospective transferee and its owners, officers, directors, partners, members and management, in the case of an Entity;
  • (ii) If Big O or its assignee fails to exercise the Option to purchase the interest as provided in Section 18.04(a)(iv) or if the Option right is not available to Big O due to a transfer of less than fifty percent (50%) of Franchisee's ownership, Franchisee shall be required to obtain Big O's approval of the proposed Transfer and the proposed transferee. 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.

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