factual

What article of the Counselor Realty franchise agreement governs transfers?

Counselor_Realty Franchise · 2025 FDD

Answer from 2025 FDD Document

[Item 22: CONTRACTS]

9. TRANSFER OF FRANCHISE.

  • 9.1 Transfer Standards.

You agree not to change or allow a change, directly or indirectly, in the ownership or Control of (i) your interest in this Agreement, (ii) the Office, any Additional Office, any Extension Office or Business, (iii) a majority of the assets of the Office, any Additional Office, any Extension Office or Business, or (iv) if Franchisee is an entity, any ownership interest in, or Control of, Franchisee or any direct or indirect owner of Franchisee (each, a "transfer"), without having first tendered to us the right of first refusal to acquire this Agreement, such assets or such interests in accordance with Section 9.6 and, if we do not exercise such right, without our consent and without satisfaction of the conditions stated below.

You and your transferee must follow the procedures set forth in Section 9.2, below, and the transferee must sign the then-current form of Counselor Franchise Agreement for the unexpired term, unless the Franchisee is an entity and the transfer is a transfer of an ownership interest in Franchisee or any owner of Franchisee.

We will consent to a transfer if the conditions specified in this Agreement in our opinion are satisfied and the transferee in our opinion is qualified to operate the Business in compliance with that Agreement.

Notwithstanding anything contained herein to the contrary, Counselor's consent will not be required for, and the right of first refusal set forth in Section 9.6 will not apply to, a transfer described in clause (iv) of the first sentence of this Section 9.1 if (x) such transfer (in a single transaction or series of related transactions) will not result in a change in Control of Franchisee or such direct or indirect owner of Franchisee, (y) you provide Counselor with written notice of such transfer, together with such other information concerning such transfer and transferee as we may require, at least thirty (30) days prior to the consummation of such transfer, and (z) if such transfer is a transfer of an ownership interest in Franchisee, such transferee executes the guaranty attached to this Agreement and delivers such guaranty to Counselor within ten (10) days of such transfer.


[Item 22: CONTRACTS]

For purposes of this Article 9, "Control" means, with respect to the applicable person or entity, ownership or control, directly or indirectly, of a majority of the voting ownership of such person or entity or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person or entity, by contract or otherwise.

  • 9.2 Other Conditions to Transfer.

You must apply for our consent by submitting written notice of the pending transfer, with a complete application, signed by you and by the proposed transferee, and payment of the transfer fee, at least 60 days before the proposed transfer date.

The transfer fee is $2,000 and applies to all transfers (excluding transfers described in, and in accordance with, the second to last sentence of Section 9.1).

We may specifically withhold consent if: (i) you do not pay all amounts you owe to Counselor or its affiliates or to your suppliers; (ii) you (or the transferee) do not complete the repair, maintenance or upgrade of the Business' facility, fixtures, equipment, and signage to then-current System standards; or (iii) all shareholders or owners of the transferee do not execute the guaranty of the new Agreement.

Source: Item 22 — CONTRACTS (FDD page 32)

What This Means (2025 FDD)

According to Counselor Realty's 2025 Franchise Disclosure Document, Article 9 of the franchise agreement governs the transfer of a franchise. This section outlines the standards and conditions that a franchisee must meet to transfer their interest in the agreement, the office, or the business. It also addresses the transfer of ownership interest if the franchisee is an entity.

Specifically, Section 9.1 states that a franchisee must first offer Counselor Realty the right of first refusal before making any transfer. If Counselor Realty waives this right, the franchisee must obtain Counselor Realty's consent and satisfy certain conditions. The franchisee and the transferee must follow the procedures in Section 9.2, and the transferee must sign the current form of the Counselor Realty Franchise Agreement for the unexpired term.

Section 9.2 outlines other conditions for transfer, including providing written notice of the pending transfer at least 60 days before the proposed date, along with a complete application signed by both parties, and payment of a $2,000 transfer fee. Counselor Realty may withhold consent if the franchisee owes money to Counselor Realty or its affiliates, if the facility is not up to system standards, or if all shareholders of the transferee do not execute the guaranty of the new agreement. These stipulations ensure that Counselor Realty maintains control over who operates franchises and that the brand's standards are upheld even when ownership changes.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.