Can Cordova withhold consent for a Cordova franchisee to transfer the franchise?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
| i. | Franchisee's obligations on termination/non-renewal | 6, 17 | You must: pay all sums that you owe to us under the Franchise Agreement and all other agreements with us; cease owning and operating the Franchised Business; cease representing yourself as a franchisee of ours; permanently cease using and/or accessing the System, the Licensed Marks, our confidential information, the Manuals, the Business Management System, the Business Management System Data, and the System Supplies; return the Manuals and all confidential information to us in the original form provided to you and document the destruction of all electronic files related to same; completely de-identify the location and/or facility associated with the Franchised Business; as requested by us, transfer to us all data, telephone listings, digital media, accounts, web listings and websites associated with the Franchised Business; and abide by the post-termination non competition covenants and restrictions. |
|---|---|---|---|
| j. | Assignment of the contract by franchisor | 14.A. | No restriction on our right to assign. |
| k. | "Transfer" by franchisee definition | 14.B. | A transfer means and includes, whether voluntary or involuntary, conditional or unconditional, direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub-franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; and (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee. |
| l. | Franchisor's approval of transfer by franchisee | 14.B. | Transfers require our prior written consent, which may be granted or withheld in our discretion. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–37)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, Cordova has the right to withhold consent for a franchise transfer. The FDD states that transfers require Cordova's prior written consent, which may be granted or withheld at their discretion. This means a franchisee cannot transfer their Cordova franchise to another party without first obtaining approval from Cordova.
This provision gives Cordova significant control over who becomes a franchisee within their system. While many franchise agreements include transfer provisions, the ability to withhold consent at their discretion provides Cordova with broad authority. This protects the brand by ensuring that any new franchisee meets Cordova's standards and qualifications.
For a prospective franchisee, this highlights the importance of understanding the conditions under which a transfer might be desired (e.g., health issues, retirement, or other business opportunities) and discussing these scenarios with Cordova beforehand. While Cordova's right to withhold consent might seem restrictive, it is a common practice in franchising designed to maintain brand consistency and protect the overall network. Franchisees should carefully consider this provision and its potential implications before entering into a franchise agreement with Cordova.