Is the transfer of the Cd One Price Cleaners store allowed only with a transfer of the agreement?
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;
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to the 2025 FDD, the transfer of a Cd One Price Cleaners store is tied to the transfer of the franchise agreement. Specifically, the FDD outlines conditions under which the franchisor, Cd One Price Cleaners, will not unreasonably withhold approval of a transfer, indicating that transfers are permissible under certain circumstances. These conditions include the transferee meeting the franchisor's standards, payment of transfer fees, and adherence to the franchise agreement terms.
For a Cd One Price Cleaners franchisee, this means that selling their store involves a formal transfer process that requires franchisor approval. The franchisor assesses the proposed transferee's qualifications, ensuring they meet the standards for Cd One Price Cleaners franchisees. This process protects the brand's reputation and operational consistency. Additionally, the transferor remains liable for obligations to Cd One Price Cleaners even after the transfer, highlighting the importance of fulfilling all contractual duties before and after the transfer.
Furthermore, the transferee must refurbish the store to meet current standards, complete the initial training program, and comply with post-termination obligations. The transfer also involves fees, specifically a transfer fee of $4,000 if the transferee is an existing Cd One Price Cleaners franchisee, and $8,000 otherwise, with an initial non-refundable payment of $1,000 due when the transfer request is submitted. These stipulations ensure that any new owner is well-prepared and committed to maintaining Cd One Price Cleaners' standards, while also compensating the franchisor for the administrative costs associated with the transfer.