What actions constitute a 'Transfer' of a Care Plus Medical Ucc franchise?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
LE 15. TRANSFERS**
- 15.1 By Care Plus Medical UCC. Care Plus Medical UCC may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Care Plus Medical UCC may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Care Plus Medical UCC entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Care Plus Medical UCC at least 60 days prior notice of the proposed Transfer, and without obtaining Care Plus Medical UCC's consent. In granting any such consent, Care Plus Medical UCC may impose conditions, including, without limitation, the following:
- (i) Care Plus Medical UCC receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Care Plus Medical UCC;
- (ii) the proposed assignee and its owners have completed Care Plus Medical UCC's franchise application processes, meet Care Plus Medical UCC's then-applicable standards for new franchisees, and have been approved by Care Plus Medical UCC as franchisees;
- (iii) the proposed assignee is not a Competitor;
- (iv) the proposed assignee executes Care Plus Medical UCC's then-current form of franchise agreement and any related documents, which form may contain materially different provisions than this Agreement (provided, however, that the proposed assignee will not be required to pay an initial franchise fee);
- (v) all owners of the proposed assignee provide a guaranty in accordance with Section 2.5;
- (vi) Franchisee has paid all monetary obligations to Care Plus Medical UCC and its affiliates, and to any lessor, vendor, supplier, or lender to the Business, and Franchisee is not otherwise in default or breach of this Agreement or of any other obligation owed to Care Plus Medical UCC or its affiliates;
- (vii) the proposed assignee and its owners and employees undergo such training as Care Plus Medical UCC may require;
- (viii) Franchisee, its Owners, and the transferee and its owners execute a general release of Care Plus Medical UCC in a form satisfactory to Care Plus Medical UCC; and
- (ix) the Business fully complies with all of Care Plus Medical UCC's most recent System Standards.
- 15.3 Transfer for Convenience of Ownership. If Franchisee is an individual, Franchisee may Transfer this Agreement to a corporation or limited liability company formed for the convenience of ownership after at least 15 days' notice to Care Plus Medical UCC, if, prior to the Transfer: (1) the transferee provides the information required by Section 2.3; (2) Franchisee provides copies of the entity's charter documents, by-laws (or operating agreement) and similar documents, if requested by Care Plus Medical UCC, (3) Franchisee owns all voting securities of the corporation or limited liability company, and (4) Franchisee provides a guaranty in accordance with Section 2.5.
- 15.4 Transfer upon Death or Incapacity. Upon the death or incapacity of Franchisee (or, if Franchisee is an entity, the Owner with the largest ownership interest in Franchisee), the executor, administrator, or personal representative of that person must Transfer the Business to a third party approved by Care Plus Medical UCC (or to another person who was an Owner at the time of death or incapacity of the largest Owner) within nine months after death or incapacity. Such transfer must comply with Section 15.2.
- 15.5 Care Plus Medical UCC's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3, to a co-Owner, or to a spouse, sibling, or child of an Owner), Care Plus Medical UCC will have a right of first refusal, as set forth in this Section. Franchisee (or its Owners) shall provide to Care Plus Medical UCC a copy of the terms and conditions of any Transfer. For a period of 30 days from the date of Care Plus Medical UCC's receipt of such copy, Care Plus Medical UCC will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions (except that Care Plus Medical UCC may substitute cash for any other form of payment). If Care Plus Medical UCC does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
Source: Item 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to the 2024 Care Plus Medical Ucc Franchise Disclosure Document, a franchisee cannot freely transfer their franchise agreement. The document specifies several scenarios that constitute a transfer, each with its own set of conditions.
A standard transfer by the franchisee requires providing Care Plus Medical Ucc with at least 60 days' prior notice and obtaining their consent. Care Plus Medical Ucc may impose conditions such as receiving a $10,000 transfer fee plus broker fees and out-of-pocket costs. The proposed assignee must also meet Care Plus Medical Ucc's standards for new franchisees, not be a competitor, and execute the then-current franchise agreement, though they won't have to pay an initial franchise fee. Additionally, all owners of the proposed assignee must provide a guaranty, and the franchisee must have paid all monetary obligations to Care Plus Medical Ucc and not be in default of any agreements. The business must also comply with Care Plus Medical Ucc's most recent System Standards, and both parties must execute a general release of Care Plus Medical Ucc.
There are exceptions for transfers for convenience of ownership, such as transferring the agreement to a corporation or LLC formed for ownership purposes, provided the franchisee owns all voting securities of the entity and gives at least 15 days' notice. In the event of death or incapacity, the franchisee's representative must transfer the business within nine months, complying with the standard transfer conditions. Care Plus Medical Ucc also retains a right of first refusal to purchase the assets of the proposed transfer under the same terms and conditions offered.
These transfer provisions are typical in franchising, as they allow Care Plus Medical Ucc to maintain control over who operates under their brand and to ensure that any new franchisee meets their standards and obligations. Prospective franchisees should carefully consider these conditions, as they can significantly impact the ability to sell or transfer the franchise in the future.