In Michigan, does the law specify what constitutes 'reasonable qualifications or standards' for a Bombs Away transferee?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
(i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Michigan law addresses the transfer of franchise ownership and specifies some conditions that constitute 'good cause' for a franchisor to refuse a transfer. Michigan law states that a franchisor can refuse a transfer if the proposed transferee does not meet the franchisor's "then-current reasonable qualifications or standards." However, the law does not specifically define what constitutes 'reasonable qualifications or standards'.
Other conditions that constitute 'good cause' for Bombs Away to refuse a transfer include if the proposed transferee is a competitor or is unwilling to comply with all lawful obligations. Additionally, the franchisor can refuse a transfer if the franchisee or proposed transferee has not paid all sums owing to Bombs Away or cured any default in the franchise agreement at the time of the proposed transfer.
It is important for a prospective Bombs Away franchisee in Michigan to understand that while the law protects their right to transfer the franchise, the franchisor has the right to ensure the transferee meets certain qualifications. A potential franchisee should seek clarification from Bombs Away regarding the specific qualifications and standards required for a transferee to avoid potential disputes during a future transfer.