Does Bor Restoration consider a transfer resulting from a divorce to be a 'Transfer'?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
A "Transfer" also includes (iv) a transfer as a gift to any Person; (v) a transfer resulting from a divorce, insolvency, or business-entity dissolution proceeding; (vi) by operation of law; (vii) in the event of the death, transfer or disposition by will or under the laws of intestate succession; (viii) by the declaration of or transfer in trust; (ix) the pledge of any of interests described in this paragraph as a security interest; (ix) as the result of any merger, stock redemption, consolidation, reorganization, recapitalization or other transfer of control of you; and, (xi) by any other direct or indirect means.
- d.
If a Proposed Transfer is only among existing natural-person franchisees, existing shareholders, equity holders, or members of a corporate or limited liability company franchisee, or among existing partners of a partnership franchisee, and if there is no Change of Control, then there will be no Transfer Fee, and we will not be entitled to exercise our "Right of First Refusal" which is described below.
We may require the Transferee to sign a guaranty if they have not already done so.
All other conditions to the approval of a Proposed Transfer will, however, apply.
If the Proposed Transfer under this subsection could result in a Change in Control, then all of our rights apply, and such Transfer will be subject to our approval
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, a transfer resulting from a divorce is considered a 'Transfer.' Specifically, the document defines 'Transfer' to include a transfer resulting from a divorce proceeding. This means that if a Bor Restoration franchisee's ownership changes due to a divorce, it is classified as a transfer under the franchise agreement.
This classification has important implications for the franchisee. Because a divorce-related ownership change is a 'Transfer,' it triggers certain requirements and potential restrictions outlined in the franchise agreement. Bor Restoration may need to approve the transfer, and fees or other conditions could apply. However, if the transfer is only among existing natural-person franchisees and there is no Change of Control, then there will be no Transfer Fee, and Bor Restoration will not be entitled to exercise their Right of First Refusal.
Furthermore, the FDD also defines 'Involuntary Transfer' to include the taking of any interest in you, this Franchise Agreement or the franchisee business entity as a result of a divorce or separation. Any Involuntary Transfer by you is not binding on Bor Restoration and is grounds for termination without the right to cure. Therefore, it is critical for prospective franchisees to understand these transfer provisions and how they might be affected by unforeseen circumstances such as divorce.