Under what conditions can Carbones Pizzeria 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, Carbones Pizzeria has the right to withhold consent for a franchise transfer if certain conditions are not met. Before a franchisee can transfer their interest in the franchise, they must provide written notice to Carbones Pizzeria, including the precise terms and conditions of the proposed transfer. Carbones Pizzeria then has a 60-day option to purchase the franchisee's interest on those same terms.
If Carbones Pizzeria declines to exercise its right of first refusal, the franchisee has 30 days to complete the transfer, but only under the exact terms previously disclosed. Critically, the franchisee must still obtain Carbones Pizzeria's prior written consent for the transfer to proceed. Carbones Pizzeria states that it will not unreasonably withhold consent if certain conditions are satisfied.
However, Carbones Pizzeria is deemed to have reasonable grounds for withholding consent if the prospective purchaser does not have sufficient business qualifications or will not comply with Carbones Pizzeria's then-current training requirements. This provision gives Carbones Pizzeria significant latitude to reject a transfer if they believe the buyer is not a good fit for the franchise system. This is a fairly standard clause in franchise agreements, as franchisors want to ensure that new franchisees meet their standards to protect the brand.