What constitutes 'good cause' for Cordova to refuse a transfer of ownership?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
Provided Franchisee and each Owner and Spouse, respectively, are in substantial compliance with this Agreement and the Ancillary Agreements, and Franchisor does not elect to exercise Franchisor's right of first refusal as set forth in Article 14.F. below, Franchisor shall not unreasonably withhold its approval of a Transfer by Franchisee or an Owner. The proposed transferee (including such assignee's owner(s) and spouse(s) if the proposed transferee is a Corporate Entity) must be of good moral character, have sufficient business experience, aptitude and financial resources to own and operate a Cordova Business, and otherwise meet Franchisor's then applicable standards for franchisees as determined by Franchisor in its sole, but reasonable discretion. Furthermore, the proposed transferee and the proposed transferee's owners and spouses may not own or operate, or intend to own or operate, a Competitive Business. Franchisee agrees that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:
Source: Item 23 — RECEIPTS (FDD pages 44–195)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Cordova can refuse a transfer of ownership if the franchisee and each owner are not in substantial compliance with the Franchise Agreement and Ancillary Agreements. Cordova also has a right of first refusal. If Cordova does not exercise its right of first refusal, Cordova will not unreasonably withhold approval of a transfer by a franchisee or owner.
Cordova will assess the proposed transferee to ensure they are of good moral character and possess sufficient business experience, aptitude, and financial resources to successfully operate a Cordova business. The proposed transferee must also meet Cordova's standards for franchisees, as determined by Cordova in its reasonable discretion. Additionally, the proposed transferee, including their owners and spouses, cannot own, operate, or intend to own or operate a Competitive Business.
Cordova may also require the franchisee to fulfill certain conditions before or during the transfer. These conditions are not specified in this excerpt, so a prospective franchisee should inquire about these potential conditions. Cordova also has the right of first refusal, meaning that if a franchisee receives an offer to transfer their business, they must first offer Cordova the opportunity to purchase the business on the same terms. Cordova has 30 days to decide whether to exercise this right.