Why does Care Plus Medical Ucc require franchisee consent for transfer of the agreement?
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;
Source: Item 22 — CONTRACTS (FDD page 41)
What This Means (2024 FDD)
According to Care Plus Medical Ucc's 2024 Franchise Disclosure Document, the franchisee's consent is required for a transfer of the franchise agreement because Care Plus Medical Ucc has placed specific reliance on the franchisee's individual capabilities. Care Plus Medical Ucc acknowledges that the rights and duties outlined in the agreement are personal to the franchisee. The company has entered into the agreement based on its assessment of the franchisee's business skills, financial capacity, personal character, experience, and overall business ability.
Because of this reliance, the franchisee cannot transfer the agreement without first providing Care Plus Medical Ucc with a minimum of 60 days' notice. The franchisee must also obtain Care Plus Medical Ucc's consent before completing the transfer. This consent is not guaranteed and may be subject to certain conditions imposed by Care Plus Medical Ucc.
These conditions can include the payment of a transfer fee, which is $10,000 plus any broker fees and out-of-pocket costs incurred by Care Plus Medical Ucc. Additionally, the proposed assignee must meet Care Plus Medical Ucc's standards for new franchisees, complete the franchise application process, and be approved by Care Plus Medical Ucc. The assignee must not be a competitor and may be required to execute Care Plus Medical Ucc's current franchise agreement, which could contain materially different provisions. Furthermore, all owners of the proposed assignee must provide a guaranty, and the franchisee must have fulfilled all monetary obligations to Care Plus Medical Ucc and not be in default of any agreements.