What are the consequences if a Bumble Roofing franchisee is not in full compliance with the agreement when attempting to transfer it?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) No shares or interest in the capital of such corporation, limited liability company, partnership or other business entity shall be issued nor shall Franchisee directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, sell, assign, transfer, convey, donate, pledge, mortgage or otherwise encumber any such shares or interest or offer or attempt to do so or permit the same to be done without Franchisor's prior written consent;
- (c) The corporation shall maintain stop transfer instructions against the transfer of shares on its records subject to the restrictions of this Section and shall have all outstanding shares endorsed with the following legend printed conspicuously upon the face of each certificate:
"The transfer of this certificate is subject to the terms and conditions of a certain Franchise Agreement with BUMBLE ROOFING FRANCHISOR, LLC Reference is made to said Franchise Agreement and to the restrictive provisions of the articles of this corporation."
(d) The articles of incorporation, articles of organization, operating agreement, partnership agreement, shareholder agreement, and by-laws of the corporation, limited liability company, partnership or other business entity shall provide that its objectives or business is confined exclusively to the operation of the Business as provided for in this Agreement, and recite that the issuance and transfer of any shares, membership interest, partnership interest or other interest is restricted by the terms of this Agreement, and copies thereof shall be furnished to Franchisor upon request;
(e) Franchisor's consent to a transfer of any interest subject to the restrictions of this Section shall not constitute a waiver of any claim it may have against the assignor, nor shall it be deemed a waiver of Franchisor's right to demand exact compliance with any of the terms of this Agreement by the assignee;
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, if a franchisee seeks to transfer any shares or interest in their business entity, they must first obtain written consent from Bumble Roofing. Bumble Roofing's consent to a transfer does not waive any claims it may have against the transferring franchisee, nor does it waive Bumble Roofing's right to demand compliance with the franchise agreement terms by the new owner. This means that even if Bumble Roofing approves a transfer, the original franchisee remains liable for any existing breaches of the agreement, and the new franchisee must still adhere to all terms.
This requirement protects Bumble Roofing by ensuring that franchisees remain accountable for their actions even after transferring ownership. It also ensures that new franchisees are aware of and comply with all agreement terms. The franchise agreement specifies that no shares or interest in the capital of the franchisee's business can be issued or transferred without Bumble Roofing's prior written consent. The articles of incorporation must state that the business's objectives are confined to operating the Bumble Roofing business as outlined in the agreement, and copies of these documents must be provided to Bumble Roofing upon request.
These stipulations are typical in franchising, as franchisors need to maintain control over who operates under their brand and ensure brand standards are upheld. By requiring consent and maintaining the right to enforce the agreement terms, Bumble Roofing can minimize risks associated with transferring ownership and protect its brand reputation. Prospective franchisees should carefully consider these conditions and ensure they are in full compliance with the franchise agreement before attempting to transfer their business.