How does Counselor Realty define 'transfer' by the franchisee?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
Includes transfer of your interest in Franchise Agreement, the Office, Business or Business assets, or an interest in your business entity or your owners 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.
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. Your death, disability or incapacity (or of a principal officer, director or partner of Franchisee) is also a "transfer." Your executor, heir or legal representative (or the corporation or partnership, if an entity) must apply within 60 days of the death or incapacity for our consent to transfer this Agreement and satisfy the other conditions above.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 25–29)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, a 'transfer' by the franchisee encompasses a broad range of changes in ownership or control. Specifically, it includes any direct or indirect change in the ownership of the franchisee's interest in the Franchise Agreement itself. It also covers changes related to the physical office, any additional offices, extension offices, or the business operations. Furthermore, if the franchisee is a business entity, any change in the ownership interest or control of the franchisee, or any direct or indirect owner of the franchisee, is considered a transfer.
This definition is important for prospective franchisees because it outlines the situations in which they must seek approval from Counselor Realty before making changes to their business. This approval process is designed to ensure that any new owners or controlling parties meet Counselor Realty's standards and are capable of operating the franchise effectively. Failing to obtain the necessary consent can result in a breach of the Franchise Agreement and potential termination of the franchise.
However, Counselor Realty's consent is not required for a transfer of ownership interest in the franchisee if the transfer does not result in a change of control, the franchisee provides written notice to Counselor Realty 30 days prior to the transfer, and the transferee executes a guaranty.
Additionally, the FDD states that the death, disability, or incapacity of the franchisee (or a principal officer, director, or partner of the Franchisee) is also considered a transfer. In such cases, the franchisee's executor, heir, or legal representative must apply for Counselor Realty's consent to transfer the agreement within 60 days of the event and satisfy all other conditions for transfer.