What happens if City Wide disapproves of the proposed transferee during a transfer?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
cted by a Transfer permitted under Section 13.3. The Gross Sales generated during the calendar year in which a Transfer under Section 13.3 occurs will be calculated as if the Transfer under Section 13.3 did not occur.
- 13.4 Conditions for Transfer by Franchisee. If Franchisee, an Affiliated Company or an Owner desire to make a Transfer to a person or entity other than as described in Section 13.3 or 13.6, such person or entity must comply with the following terms, conditions, and procedures to effectuate a valid Transfer:
- 13.4.1 Franchisee will first notify CITY WIDE in writing of the proposed Transfer with a complete description of all terms of the proposed Transfer, including the prospective transferee's name, address, financial qualifications, and previous five (5) years' business experience.
- 13.4.2 The proposed transferee will then apply for a Franchised Business under the System and must meet all of CITY WIDE's then-current standards and requirements for becoming a franchisee.
- 13.4.3 CITY WIDE may, within sixty (60) days after receipt of such notice or application, whichever is later, exercise the right to purchase the interest being offered by Franchisee, an Affiliated Company, or any Owner ("Option") by matching the monetary purchase price and payment schedule terms (without having to match any other non-monetary terms) of the proposed Transfer.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if a franchisee desires to transfer their business to another party, the franchisee must first notify City Wide in writing, providing complete details of the proposed transfer, including the prospective transferee's information. The proposed transferee must then apply for a City Wide franchise and meet all of City Wide's current standards for franchisees. City Wide then has the option to purchase the interest being offered by the franchisee by matching the monetary purchase price and payment schedule terms of the proposed transfer.
City Wide will notify the franchisee in writing of its approval or disapproval of the prospective transferee within thirty days after the option to purchase has expired. The FDD does not explicitly state what happens if City Wide disapproves of the proposed transferee. However, it does state that any purported assignment or transfer without City Wide's prior written consent will be considered null and void and a material breach of the agreement, entitling City Wide to immediately terminate the agreement.
Given this information, if City Wide disapproves of the proposed transferee, the franchisee would not be able to transfer the business to that specific transferee. To complete a transfer, the franchisee would need to find a different transferee who meets City Wide's approval. It is important to note that City Wide will not unreasonably withhold approval of a transfer to a proposed transferee who is of good moral character and whose business experience and aptitude, financial resources, and other qualifications meet City Wide's then-current standards, so long as the franchisee is in full compliance with the Franchise Agreement at the time of the proposed transfer.
Prospective franchisees should inquire with City Wide about the specific reasons a transferee might be disapproved and what recourse a franchisee has if they believe a disapproval was unreasonable. Understanding these factors is crucial for planning an exit strategy and ensuring the business can be sold when desired.