Under what conditions can Carbones Pizzeria reasonably withhold consent for a franchise transfer?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
a. Throughout the term of this Agreement and any extension thereof, Franchisee shall not at any time, directly or indirectly, sell, assign, mortgage, pledge, grant a security interest in, encumber, make a gift of, or otherwise transfer or dispose of Franchisee's interest in this Agreement, the Franchise, the Restaurant or its business or any entity that directly or indirectly owns an interest in any of the foregoing (collectively, a "Transfer") except in accordance with the provisions of this Agreement. Should Franchisee desire to engage in a Transfer, Franchisee must first give written notice to Franchisor of the intention to make such a Transfer, setting out the precise terms and conditions of such proposed Transfer. Franchisor shall have an option for sixty (60) days after the date of receipt of such written notice to purchase the interest then owned by Franchisee upon the same terms and conditions as those set forth in the required notice.
If Franchisor does not exercise the option granted to it, then Franchisee may thereafter engage in the Transfer described in the required notice during the thirty (30) days immediately following the expiration of the sixty (60) day period hereinabove described; provided that such Transfer is made on precisely the same terms and conditions as those specified in the notice required hereunder; and provided, further, that Franchisee obtains the prior written consent of Franchisor for the Transfer. Such Transfer shall not be made on terms and conditions other than those set forth in the notice required hereunder, no matter now slight such variance might be. If the Transfer does not occur within such additional thirty (30) day period, such interest shall thereafter again be subject to all of the restrictions of this Agreement with respect to any Transfer.
- b. Franchisor, if it does not exercise its right of first refusal, will not unreasonably withhold consent to the Transfer of Franchisee's interest, but if any of the following conditions are not satisfied (without particular limitation to the following list) Franchisor shall be deemed to have reasonable grounds for withholding such consent:
- (1) Franchisor must be satisfied that the prospective purchaser has sufficient business qualifications and will comply with Franchisor's then current training requirements;
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, a franchisee cannot transfer their interest in the Franchise Agreement, the Franchise, the Restaurant, or its business without written notice to Carbones Pizzeria. Carbones Pizzeria has the option to purchase the franchisee's interest within sixty days of receiving this notice, under the same terms and conditions as the proposed transfer.
If Carbones Pizzeria declines to exercise its purchase option, the franchisee has thirty days to proceed with the transfer, provided it is on the same terms as initially notified. The franchisee must also obtain Carbones Pizzeria's prior written consent for the transfer. If the transfer does not occur within this 30-day window, the interest becomes subject to transfer restrictions again.
Carbones Pizzeria will not unreasonably withhold consent for the transfer if they decline their right of first refusal. However, Carbones Pizzeria is deemed to have reasonable grounds for withholding consent if the prospective purchaser does not have sufficient business qualifications or fails to meet Carbones Pizzeria's current training requirements.