What constitutes a 'transfer' of interest for a Cd One Price Cleaners franchise?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
meets all of the requirements in this Article 12. A transfer of the Store's and/or the Operating Assets' ownership, possession or control may be made only with a transfer of this Agreement. Any transfer without Franchisor's approval is a breach of this Agreement and has no effect. In this Agreement, the term "transfer" includes any voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition and includes, without limitation, the following events:
- (a) transfer of record or beneficial ownership of stock or any other ownership interest or right to receive all or a portion of Franchisee's profits or losses or any capital appreciation relating to Franchisee or the Store;
- (b) a merger, consolidation or exchange of ownership interests, or issuance of additional ownership interests or securities representing or potentially representing ownership interests, or a redemption of ownership interests;
- (c) any sale or exchange of voting interests or securities convertible to voting interests, or any management agreement or other agreement granting the right to exercise or control the exercise of the voting rights of any owner or to control Franchisee's or the Store's operations or affairs;
- (d) transfer of an interest in Franchisee, this Agreement, the Operating Assets or the Store (or any right to receive all or a portion of Franchisee's or the Store's profits or losses or any capital appreciation relating to Franchisee or the Store) in a divorce, insolvency or entity dissolution proceeding, or otherwise by operation of law;
- (e) if Franchisee (or one of its owners) dies, transfer of an interest in Franchisee, this Agreement, the Operating Assets or the Store (or any right to receive all or a portion of Franchise's or the Store's profits or losses or any capital appreciation relating to Franchisee or the Store) by will, declaration of or transfer in trust, or under the laws of intestate succession; or
- (f) the grant of a mortgage, charge, pledge, collateral assignment, lien or security interest in any interest in this Agreement, the Store, any of the Operating Assets or an ownership interest in Franchisee; foreclosure upon or attachment or seizure of the Store or any of its Operating Assets or any interest in Franchisee; or Franchisee's transfer, surrender or loss of the Store's possession, control or management.
- 12.3 Conditions for Franchisor's Approval of Transfer. If Franchisee is in full compliance with this Agreement, then, subject to the other provisions of this Article 12, Franchisor will not unreasonably withhold its approval of a transfer that meets all the requirements in this Section.
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to the 2025 FDD, Cd One Price Cleaners defines a 'transfer' broadly, encompassing various changes in ownership or control of the franchise. This includes not only direct sales of the franchise itself but also extends to changes in the ownership of the business entity that holds the franchise.
Specifically, a transfer includes any transfer of record or beneficial ownership of stock, any right to receive profits, losses, or capital appreciation related to the franchise. It also covers mergers, consolidations, exchanges of ownership interests, issuance of additional ownership interests, or redemption of existing interests. Furthermore, any sale or exchange of voting interests, securities convertible to voting interests, or any agreement granting control over voting rights or the franchise's operations is considered a transfer.
The definition extends to involuntary transfers, such as those occurring in divorce, insolvency, or entity dissolution proceedings, or transfers due to death or mental incapacity. Even the grant of a mortgage, charge, pledge, lien, or security interest in the franchise or its assets can be considered a transfer, as can foreclosure, attachment, or seizure of the store or its assets. This comprehensive definition means that franchisees must seek approval from Cd One Price Cleaners for a wide range of transactions affecting the ownership or control of the franchise.
Cd One Price Cleaners emphasizes that the rights granted to the developer are personal, based on the franchisor's assessment of the developer's character, skills, business acumen, financial capability, and ability to operate according to their standards. Therefore, any change in ownership or control is subject to the franchisor's approval, which they may grant or withhold at their discretion.