Does the Cd One Price Cleaners franchisor have to be reasonable when withholding consent for a transfer?
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 A
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to the 2025 Cd One Price Cleaners Franchise Disclosure Document, Cd One Price Cleaners will not unreasonably withhold approval of a transfer if the franchisee is in full compliance with the agreement and the transfer meets all requirements. This applies to the transfer of a non-controlling ownership interest in the franchisee, or the transfer of a controlling or non-controlling ownership interest in one of the franchisee's direct or indirect owners, provided that it results in the indirect transfer of a non-controlling ownership interest in the franchisee.
Several conditions must be met for Cd One Price Cleaners to approve the transfer. The proposed transferee and their owners must be of good moral character, not have interests in or perform services for a competitive business, and meet Cd One Price Cleaners' standards for franchisees. Additionally, the franchisee must pay a non-refundable transfer fee of $1,000 to cover the franchisor's costs. All new owners of any direct or indirect ownership interest in the franchisee must sign Cd One Price Cleaners' current form of personal guarantee, agreeing to be personally bound by the franchisee's obligations under the agreement.
For transfers of the agreement itself, a direct or indirect controlling interest in the franchisee, or a series of transfers that collectively result in such a transfer, Cd One Price Cleaners will not unreasonably withhold approval if certain conditions are met before or during the transfer. These conditions likely involve more stringent requirements to ensure the new owner can properly operate the Cd One Price Cleaners franchise.