Under what conditions will Cost Cutters Family Hair Salon approve a transfer of my franchise?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| franchise agreement (for a Cost Cutters store or any other brand store) between FRANCHISEE (or any of its affiliates) and Cost Cutters, or FRANCHISEE (or any of its affiliates) has terminated another franchise agreement with Cost Cutters without cause | |||
| i. | Your obligations on termination/ nonrenewal | Article 11 | You must cease using Cost Cutters' marks; alter your Franchised Location to distinguish it from Cost Cutters Businesses; pay what you owe Cost Cutters pursuant to the Franchise Agreement; return all printed materials Cost Cutters provided you; and transfer your telephone directory listings to Cost Cutters |
| j. | Assignment of the contract by Cost Cutters | Article 20.1 | No restriction on Cost Cutters' right to assign |
| k. | "Transfer" by you – defined | Articles 20.2 and 20.3 | Assignment of rights under the Franchise Agreement |
| l. | Cost Cutters' approval of transfer by you | Article 20.4 | Cost Cutters has the right to approve any transfer made by you but will not unreasonably withhold its consent |
| m. | Conditions for Cost Cutters' approval of transfer | Articles 20.4, 20.6 and 20.7 | You pay all money owed to Cost Cutters; comply with Cost Cutters' right of first refusal; complete a written agreement satisfactory to Cost Cutters; transferee's shareholders agree to be personally bound to the Franchise Agreement; if required by Cost Cutters transferee franchisee meets Cost Cutters' then-current standards and specifications and agrees to modernize the Franchised Location within 6 months of the transfer date if the store is more than 7 years old and has not been remodeled within the past 5 years; transferee acquires the Franchised Location; transferee signs a current Franchise Agreement; transferee pays deposit for and completes training program; you pay the transfer fee; and Cost Cutters may require you to remain liable for obligations of the transferee franchisee if the transferee franchisee does not meet Cost Cutters' net worth requirements |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 59–65)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, Cost Cutters Family Hair Salon has the right to approve any transfer made by a franchisee, but they will not unreasonably withhold consent. Several conditions must be met for Cost Cutters Family Hair Salon to approve a transfer.
First, the franchisee must pay all outstanding money owed to Cost Cutters Family Hair Salon. The franchisee must also comply with Cost Cutters Family Hair Salon's right of first refusal, meaning the franchisee must first offer to transfer the Cost Cutters Family Hair Salon business to Cost Cutters Family Hair Salon itself. A written agreement satisfactory to Cost Cutters Family Hair Salon must be completed. The transferee's shareholders must agree to be personally bound to the Franchise Agreement.
Additionally, if required by Cost Cutters Family Hair Salon, the transferee franchisee must meet Cost Cutters Family Hair Salon's then-current standards and specifications. The transferee must also agree to modernize the Franchised Location within 6 months of the transfer date if the store is more than 7 years old and has not been remodeled within the past 5 years. The transferee must acquire the Franchised Location and sign a current Franchise Agreement. The transferee must also pay a deposit for and complete the training program. Finally, the franchisee must pay the transfer fee, and Cost Cutters Family Hair Salon may require the franchisee to remain liable for the obligations of the transferee franchisee if the transferee franchisee does not meet Cost Cutters Family Hair Salon's net worth requirements.