Where can I find the definition of 'Owners' in the Corcoran Franchise Agreement?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
15.0 OWNERSHIP CHANGES AND TRANSFERS OF THE FRANCHISE:
- 15.1 Ownership Changes. We must first approve in writing any proposed ownership change to transfer 10% or more of the Franchisee ownership rights. If an ownership change results in a Transfer of the Franchise (as defined in Section 15.4), the provisions set forth in this Section 15 apply. You will ensure all new Owners comply with Section 22.11 and any proposed ownership change to a potential new Owner who does not comply with Section 22.11 will be automatically void and of no further force and effect.
- **15.2 No Transfer or Assignment.**You acknowledge that your rights and obligations under this Agreement are personal to you, and we have granted this franchise in reliance on many factors, including your (and your Owners') character, skill, knowledge, business and financial capacity. You may not assign your rights or delegate your duties under this Agreement, except as permitted by this Agreement or required by law.
- 15.3 Limited Assignment Right for Sole Proprietorships or Partnerships. If you are a sole proprietorship or partnership, we expressly consent to the assignment of this Agreement, without payment of a fee, to an entity owned and controlled by the same Owners, provided that the Owners execute an assignment agreement and guaranty of the assignee's obligations to us. You must notify us in writing of any proposed assignment under this Section and must provide and/or sign all documents we request including, assignment documents, Articles of Incorporation or Organization and Bylaws.
- 15.4 Transfer of the Franchise – Definition. "Transfer of the Franchise" will mean any transaction or series of transactions that results in: (i) the sale or transfer of substantially all of the Business's assets; (ii) the majority Owner(s) before the transaction(s) holding less than 51% equity interest in you or the
Business's assets; (iii) another entity becoming a franchisee; or (iv) the Owner(s) no longer controlling or managing the Business. The Transfer of the Franchise may include transfers resulting from a divorce, death, insolvency, dissolution, declaration of or transfer in trust, or a foreclosure on the Business assets. If any Owners are entities, a Transfer of the Franchise will be deemed to occur if such Owner entity experiences any of these events or transactions.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 62)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, Section 15.4 of the Franchise Agreement defines "Transfer of the Franchise," which includes scenarios impacting the ownership of the business. This section specifies that a "Transfer of the Franchise" occurs when there is a sale or transfer of substantially all business assets, a change in majority ownership where the previous owners hold less than 51% equity, another entity becomes a franchisee, or the owners no longer control or manage the business. This definition extends to transfers resulting from events like divorce, death, insolvency, or foreclosure. If any owners are legal entities, similar events or transactions affecting those entities also constitute a transfer of the franchise.
Section 15.1 discusses ownership changes, stating that Corcoran's written approval is required for any proposed ownership change that involves transferring 10% or more of the franchisee's ownership rights. If such a change results in a Transfer of the Franchise, as defined in Section 15.4, the provisions outlined in Section 15 apply. New owners must comply with Section 22.11, and any proposed ownership change involving a potential new owner who does not meet the requirements of Section 22.11 will be considered void.
Section 15.2 emphasizes that the rights and obligations under the Franchise Agreement are personal to the franchisee and its owners, and the franchise is granted based on factors such as character, skill, knowledge, and financial capacity. Consequently, franchisees cannot assign their rights or delegate their duties under the agreement, except as explicitly permitted or required by law. Section 15.3 provides a limited exception for sole proprietorships or partnerships, allowing assignment of the agreement to an entity owned and controlled by the same owners, provided that the owners execute an assignment agreement and guaranty of the assignee's obligations to Corcoran. The franchisee must notify Corcoran in writing of any proposed assignment and provide all requested documents, including assignment documents and organizational documents.