Can Big O Tires freely assign or transfer the Franchise Agreement?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 18.01 Assignment by Big O. This Agreement and all rights and duties hereunder may be freely assigned or transferred by Big O and shall be binding upon and inure to the benefit of Big O's successors and assigns.
- 18.02 Right of First Refusal. Because Big O or someone known to Big O may be interested in purchasing Franchisee's Franchised Business, the Premises, or an interest in either, if Franchisee decides to make a Transfer, Franchisee agrees to offer in writing to make the Transfer to Big O, and describe the terms under which Franchisee offers to make such a Transfer and provide a copy of the actual offer or letter of intent that contains such terms to Big O. If Big O has not offered to purchase what the Franchisee has offered to Transfer to Big O within thirty (30) days after Big O receives the notice from Franchisee, Franchisee may then offer to make the Transfer to third parties on the same or not more favorable terms and conditions as were offered to Big O. If Franchisee does not consummate, in accordance with the terms offered to Big O, the Transfer within six (6) months after Franchisee gives notice of the Transfer to Big O, Franchisee shall not make the Transfer without again first offering to make the Transfer to Big O. In the event that the offer to purchase the Franchised Business hereunder, Premises hereunder, or an interest in either, also includes the purchase of one or more other businesses, properties, or assets, the right of first refusal in this paragraph shall apply with respect to the Franchised Business and/or Premises hereunder, but the value attributable to the Franchised Business and/or Premises hereunder for the purposes of this right of first refusal shall be agreed upon by the parties in good faith based on the respective fair market values of the various properties and assets involved and the total price or consideration being offered for all of the properties and assets. If the parties cannot agree on such fair market values, the dispute shall be submitted
to arbitration with the American Arbitration Association ("AAA") in the AAA office nearest the Premises before a single arbitrator.
18.03 Transfer Legend. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Big O has granted the Franchise in reliance on Franchisee's personal background, business skills, experience, and financial capacity. It is important to Big O that Franchisee be known to Big O and always meet Big O's standards and requirements. Accordingly, neither Franchisee nor any Owner shall be permitted or have the power, without the prior written consent of Big O, to make any Transfer. To assure compliance by Franchisee with the transfer restrictions contained in this Section 18, all share or stock certificates of Franchisee, or other evidence of ownership in a Franchisee which is an Entity, shall at all times contain a legend sufficient under applicable law to constitute notice of the restrictions on such stock, or other said evidence of ownership, contained in this Agreement and to allow such restrictions to be enforceable. Such legend shall appear in substantially the following form:
The sale, transfer, pledge, or hypothecation of this [stock] is restricted pursuant to the terms of Section 18 of a Franchise Agreement dated between Big O Tires, LLC, and the issuer of these [shares].
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.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, Big O Tires has the right to freely assign or transfer the Franchise Agreement. Specifically, Big O Tires can transfer the agreement and all associated rights and duties to another party. This transfer is binding and will benefit Big O Tires' successors and assigns.
However, franchisees face restrictions on their ability to transfer the agreement. Franchisees must first offer Big O Tires the opportunity to purchase the business under the same terms they would offer a third party. This is known as the right of first refusal. If Big O Tires declines or does not respond within 30 days, the franchisee may then offer the business to others, but the terms must not be more favorable than those initially offered to Big O Tires. If the transfer is not completed within six months, the franchisee must re-offer it to Big O Tires before proceeding with a transfer to a third party.
Furthermore, franchisees cannot transfer their rights without prior written consent from Big O Tires. This consent is required because Big O Tires grants franchises based on the franchisee's personal background, business skills, experience, and financial capacity. To ensure compliance with these transfer restrictions, any ownership certificates (like stock certificates) must include a legend indicating the transfer restrictions outlined in the Franchise Agreement. Any transfer that does not comply with these terms is considered null and void.