Does the definition of 'transfer' by a Chem Dry franchisee include the transfer of equity?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in | Summary |
|---|---|---|
| Franchise | ||
| Agreement and | ||
| other agreements | ||
| confidential information, use of non | ||
| Chem-Dry cleaning solutions two or | ||
| more times, non-compliance with laws, | ||
| repeated defaults, bankruptcy related | ||
| events, termination of another franchise | ||
| agreement | ||
| i. | Section | Pay |
| Your | 16 | outstanding |
| obligations | of | amounts, |
| on | the | de |
| termination/nonrenewal | Franchise Agreement, | identification, and return of confidential |
| Section 9 of the | information, telephone numbers, | |
| Equipment Agreement | customer lists, proprietary equipment | |
| and Section 13 of the | and operating manuals (see also "s.") | |
| Software | ||
| License | ||
| Agreement | ||
| j. Assignment of contract | Section 13A of the | No restriction on CDI's right to assign |
| by us | Franchise | |
| Agreement | ||
| and the Business Note | ||
| k. "Transfer" by you – | Section 13B of the | Includes transfer of equity, the Franchise |
| definition | Franchise Agreement, | Agreement or the Business assets |
| Section | ||
| 5 | ||
| of | ||
| the | ||
| Equipment Agreement | ||
| and Section 18 of the | ||
| Software | ||
| License | ||
| Agreement | ||
| l. CDI's approval of | Section 13B | We have the right to approve all |
| transfer by you | transfers, | |
| our | ||
| consent | ||
| not | ||
| to | ||
| be |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 51–55)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the definition of 'transfer' by a franchisee does include the transfer of equity. Specifically, the FDD states that the definition of 'transfer' includes the transfer of equity, the Franchise Agreement, or the business assets.
This means that if a Chem Dry franchisee wishes to sell their franchise, the sale of the business's equity is considered a transfer under the terms of the Franchise Agreement. As such, the franchisee must adhere to the transfer provisions outlined in Item 17 of the FDD.
These provisions include obtaining Chem Dry's approval for the transfer. Chem Dry maintains the right to approve all transfers, and their consent will not be unreasonably withheld. The prospective transferee must also meet certain qualifications, including assuming all obligations, paying all outstanding amounts, having no interest in a competitive business, completing training, signing the current franchise agreement, and paying a transfer fee.