Under what circumstances can either party assign the Big O Tires Agreement without consent?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
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
- (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:
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
Based on the 2025 Big O Tires Franchise Disclosure Document, a franchisee's ability to transfer or assign their franchise agreement is subject to specific conditions outlined in Section 18.04. Generally, any transfer that results in a change of control requires the transferee to meet Big O Tires' current standards for new franchisees. This includes applying for a new franchise and potentially executing the then-current form of the franchise agreement, which may have different terms, fees, and requirements. Big O Tires also has the option to purchase the interest being offered by the franchisee at the same terms and conditions.
According to the FDD, any transfer that does not comply with the terms of Section 18 is considered null and void. This highlights the importance of adhering to the outlined procedures to ensure a valid transfer. The franchisee must also ensure that the transferee meets Big O Tires' standards and requirements, which may vary depending on the circumstances, such as sales volume or real estate value.
Furthermore, the document states that the assignment or transfer of the Note or any obligation of Maker and Co-Makers under this Note requires the Holder's consent, which can be granted or withheld at the Holder's sole discretion. This indicates that financial obligations associated with the franchise may not be freely transferable without the lender's approval. This condition adds another layer of complexity to the transfer process, as it involves not only Big O Tires' approval but also the consent of any financial institutions involved.
In summary, while the Big O Tires agreement can be assigned, it is subject to Big O Tires' approval and adherence to specific preconditions. A franchisee needs to be aware of these stipulations, including the potential for Big O Tires to impose new agreement terms or even elect to purchase the franchise interest themselves. Additionally, any related financial obligations require the consent of the Holder, adding another layer of complexity to the transfer process.