What standards must a transferee meet to the satisfaction of Closet Storage Concepts to be approved?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
e state statute regulating franchising. Our current
form or release is attached to this Agreement as Exhibit "5";
- 7.3.2.4 Franchisee has provided Franchisor a copy of the executed purchase agreement relating to the proposed transfer with all supporting documents and schedules, including transferee's assumption of and agreement to discharge all of Franchisee's obligations under this Agreement;
- 7.3.2.5 The transferee has demonstrated to Franchisor's satisfaction that transferee or its designated manager meets Franchisor's managerial and business standards; possesses a good moral character, business reputation and credit rating; has the aptitude and ability to conduct the business to be transferred; and has adequate financial resources and capital to meet the performance obligations of this Agreement; however, transferee shall not be in the same business as Franchisor either as licensor, franchisor, independent operator or licensee of any other business, chain or network which is similar in nature or in competition with Franchisor or Closet & Storage Concepts System franchisees, except that the transferee may be an existing franchisee of Franchisor;
- 7.3.2.6 The transferee has executed Franchisor's then-current Franchise Agreement, at Franchisor's option;
- 7.3.2.7 Franchisee or transferee has paid Franchisor a transfer fee equal to 50% of the then current Initial Franchise Fee, subject to a minimum of $24,750;
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts's 2025 Franchise Disclosure Document, a transferee must meet several standards to gain approval. The transferee or their designated manager must meet Closet Storage Concepts's managerial and business standards. They must also possess good moral character, business reputation, and credit rating. The transferee needs to demonstrate the aptitude and ability to conduct the business, along with adequate financial resources and capital to meet the performance obligations outlined in the Franchise Agreement. However, the transferee cannot be in the same business as Closet Storage Concepts, either as a licensor, franchisor, independent operator, or licensee of any other business, chain, or network that is similar in nature or in competition with Closet Storage Concepts or its franchisees, unless the transferee is an existing Closet Storage Concepts franchisee.
Furthermore, the transferee may need to execute Closet Storage Concepts's then-current Franchise Agreement, at Closet Storage Concepts's option. Either the franchisee or the transferee must pay Closet Storage Concepts a transfer fee equal to 50% of the then-current Initial Franchise Fee, with a minimum of $24,750. The transferee and its manager must also complete Closet Storage Concepts's training program to Closet Storage Concepts's satisfaction at the transferee's own expense within the timeframe set by Closet Storage Concepts.
Additionally, the transferee must demonstrate that they have received approval from the landlord to take over possession of the Franchised Business's lease. The post-termination provisions of the Franchise Agreement, including noncompetition provisions, will survive the transfer. The franchisor, franchisee, and transferee must enter into a transfer agreement in the form approved by Closet Storage Concepts. These conditions ensure that the new owner is well-prepared and financially stable, and that Closet Storage Concepts maintains its brand standards and competitive position.