Can a transferee of a Closet Storage Concepts franchise be involved in a similar business?
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;
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, a prospective transferee cannot be involved in a business similar to Closet Storage Concepts. The document states that the transferee cannot be in the same business as Closet Storage Concepts, whether as a licensor, franchisor, independent operator, or licensee of another business, chain, or network that is similar in nature or competes with Closet Storage Concepts or its franchisees. An exception exists if the transferee is an existing Closet Storage Concepts franchisee.
This requirement ensures that new Closet Storage Concepts franchisees are fully committed to the Closet Storage Concepts system and do not have conflicting business interests. It protects the Closet Storage Concepts brand and the proprietary information that franchisees receive.
Before a transfer is approved, Closet Storage Concepts must be satisfied that the transferee meets certain standards, including managerial and business standards, good moral character, business reputation, credit rating, aptitude, ability to conduct the business, and adequate financial resources. The transferee must also complete the Closet Storage Concepts training program and execute the then-current Franchise Agreement, if Closet Storage Concepts chooses. Additionally, a transfer fee equal to 50% of the then-current Initial Franchise Fee (subject to a minimum of $24,750) must be paid.