Under what circumstances can Big O Tires reject or cancel a contract?
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)
According to the 2025 Big O Tires Franchise Disclosure Document, Big O Tires has specific rights regarding the rejection or cancellation of contracts, particularly in the context of franchise agreement transfers and adherence to brand standards. If a franchisee or any owner desires to transfer their rights under the Franchise Agreement, Big O Tires can essentially reject the transfer if the pre-conditions outlined in Section 18.04 are not met. These pre-conditions include the transferee meeting Big O's current standards for franchisees, executing the current form of the Franchise Agreement, and executing an Agreement and Consent to Assignment of Big O Tires Store.
Furthermore, Big O Tires has the option to purchase the interest being offered by the franchisee or any owner at the same terms, conditions, and fees set forth in the notice of transfer. Big O Tires can also require the transferee or franchisee to obtain a surety bond or letter of credit. Failure to comply with these transfer terms renders the transfer null and void, effectively allowing Big O Tires to reject the transfer.
In addition to transfer-related rejections, Big O Tires emphasizes the importance of franchisees adhering to brand standards and product/service offerings. Franchisees are expected to stock a complete line of Big O private brand tires, related merchandise, and other products and services in quantities prescribed by Big O Tires. Franchisees cannot offer or sell any product or service not approved by Big O Tires and must purchase products and services only from Big O Tires or approved sources. While the document doesn't explicitly state contract cancellation for non-compliance, it implies that failure to meet these requirements could lead to breaches of the Franchise Agreement, potentially resulting in termination as per standard franchise agreement terms.