Does the Cd One Price Cleaners franchisee need approval to transfer the store?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
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. Franchisor will not unreasonably withhold its approval of the transfer of a non-controlling ownership interest in Franchisee (determined as of the date on which the proposed transfer will occur), or the transfer of a controlling or non-controlling ownership interest in one of Franchisee's direct or indirect owners (if such owner is a business entity) that results in the indirect transfer of a non-controlling ownership interest in Franchisee (determined as of the date on which the proposed transfer will occur), if:
- (a) the proposed transferee and its direct and indirect owners are of good moral character, have no interest in and do not perform services for a Competitive Business (as defined in Article 15), and otherwise meet Franchisor's then applicable standards for CD Store franchisees;
- (b) Franchisee pays a non-refundable transfer fee of One Thousand Dollars ($1,000) to partially cover Franchisor's costs relating to the proposed transfer; and
- (c) all new owners of any direct or indirect ownership interest in Franchisee sign Franchisor's then current form of personal guarantee pursuant to which they agree to be personally bound by, and personally liable for the breach of, all of Franchisee's obligations under this Agreement.
If the proposed transfer is of this Agreement or a direct or indirect controlling interest in Franchisee, or is one of a series of transfers (regardless of the period of time over which these transfers take place) which in the aggregate transfer this Agreement or a direct or indirect controlling interest in Franchisee, then Franchisor will not unreasonably withhold its approval of the transfer if all of the following conditions are met before or concurrently with the effective date of the transfer:
- 12.3.1 All of Franchisee's (and its owners') accrued monetary obligations and all other outstanding obligations to Franchisor, its affiliates, vendors, and Franchisee's landlord, suppliers and other creditors and taxes, shall have been satisfied;
- 12.3.2 Franchisee (and each of its owners) is not in default with respect to any provision of this Agreement or any other agreement between Franchisee and Franchisor or any of Franchisor's affiliates;
- 12.3.3 Franchisee and the transferor shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims which it may have against Franchisor, its affiliates and their respective owners, officers, employees and agents, including, without limitation, claims arising under federal, state and local laws and regulations;
- 12.3.4 At Franchisor's option, the transferee (and, if the transferee is a business entity, all owners of a beneficial interest in the transferee) shall either (i) enter into a written assignment, in a form satisfactory to Franchisor (including the execution of personal guarantees), assuming and agreeing to fulfill all of Franchisee's obligations under this Agreement and all related agreements, or (ii) execute, for a term ending on the expiration of the Term, the form of franchise agreement and any ancillary documents then being offered to new CD Store franchisees (including the execution of personal guarantees); provided, however, that except as provided below, the transferee shall not be required to pay any initial franchise fee;
- 12.3.5 The transferee (and, if the transferee is a business entity, all owners of a beneficial interest in the transferee) shall demonstrate to Franchisor's satisfaction that it (and they) meet Franchisor's educational, managerial and business standards and do not operate or have any direct or indirect interest in any Competitive Business;
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to the 2025 FDD, a Cd One Price Cleaners franchisee needs approval from the franchisor to transfer the store. The franchisor will not unreasonably withhold approval if the franchisee is in full compliance with the agreement and the transfer meets specific requirements.
For a transfer of a non-controlling ownership interest, the proposed transferee must be of good moral character, not have interests in a competitive business, and meet the franchisor's standards for franchisees. Additionally, the franchisee must pay a non-refundable transfer fee of $1,000, and all new owners must sign a personal guarantee to be bound by the obligations of the franchise agreement.
If the transfer involves the agreement itself or a controlling interest in the franchisee, additional conditions must be met. The transferee must demonstrate the capabilities to operate the Cd One Price Cleaners store, the terms of the transfer should not create unreasonable financial or operational burdens, and the store must be refurbished to meet current standards. The transferor remains liable for all obligations, and the transferee must comply with post-termination obligations and complete the initial training program, including paying the associated training fee. A transfer fee of $4,000 applies if the transferee is an existing franchisee, otherwise, the fee is $8,000, with an initial $1,000 due upon submission of the transfer request.