Under what conditions can Big O Tires disapprove a proposed transfer of a Big O Tires franchise?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
. 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.
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 conditions under which they can disapprove a proposed franchise transfer. Big O Tires will only approve a transfer if the prospective transferee, their owners, and/or operator meet the company's current standards for new franchisees. These standards do not have to be written and may vary based on circumstances such as the store's past or anticipated sales volume or real estate value. The prospective transferee must also demonstrate that they or their operator meet Big O Tires' managerial, business, and technical standards, possess a good moral character, business reputation, and satisfactory credit rating, and have the aptitude, ability, and financial capacity to operate the franchised business.
Big O Tires also reserves the right to disapprove a transfer if it would result in a materially increased risk, burden, or chance of not obtaining full performance of the Franchise Agreement or achieving the same level of financial performance as the business had prior to the proposed transfer. Big O Tires can also disallow a transfer of the premises alone (without the franchise) to someone who would operate a similar business selling similar products or services. The approval is also conditional on the proposed transferee or their operator completing the required training program to Big O Tires' satisfaction, and potentially additional training depending on factors like past sales volume.
These stipulations are typical in franchising, as the franchisor needs to protect its brand and ensure that new operators are capable and suitable. The non-written and variable standards provide Big O Tires with flexibility but could also create uncertainty for franchisees looking to sell. The right to disapprove a transfer that might harm Big O Tires' financial interests or increase risk is a standard protective measure for the franchisor. A prospective franchisee should discuss these transfer conditions with Big O Tires to fully understand the criteria and potential obstacles to a future sale.