In Michigan, is the unwillingness of a proposed Bombs Away transferee to comply with lawful obligations considered 'good cause' to deny the transfer?
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 the 2024 Bombs Away Franchise Disclosure Document, Michigan franchise law addresses the conditions under which a franchisor can refuse a transfer of ownership. Specifically, Michigan law states that a franchisor can refuse a transfer of ownership of a franchise for 'good cause'.
'Good cause' includes several factors. One of these factors is the unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations. This means that if a potential buyer of a Bombs Away franchise in Michigan is unwilling to commit to following the legal requirements of the franchise agreement, Bombs Away has grounds to deny the transfer.
This provision protects Bombs Away's interests by ensuring that any new franchisee is willing to adhere to the established rules and regulations. It also provides clarity for franchisees looking to sell their business, as it outlines the conditions under which a transfer may be rejected. Franchisees in Michigan should ensure any potential buyer understands and agrees to these obligations to facilitate a smooth transfer process.