What is the definition of a 'transfer' regarding a Counselor Realty franchise?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, a 'transfer' encompasses several scenarios related to changes in ownership or control of the franchise. Specifically, it includes any direct or indirect change in the ownership or control of the franchisee's interest in the Franchise Agreement itself. It also applies to changes affecting the ownership or control of the physical office, any additional offices, extension offices, or the overall business operations.
For franchisees operating as an entity (like a corporation or LLC), a transfer includes any change in the ownership interest within the entity or any shift in control of the franchisee or any direct or indirect owner of the franchisee. This broad definition ensures that Counselor Realty retains oversight over who is operating a franchise under its brand and system.
However, Counselor Realty's consent is not required for certain transfers of ownership interests within a franchisee entity, provided that the transfer does not result in a change of control. In these cases, the franchisee must still provide written notice to Counselor Realty at least 30 days before the transfer, along with relevant information about the transfer and the new transferee. If the transfer involves an ownership interest in the franchisee, the transferee must execute a guaranty agreement and deliver it to Counselor Realty within 10 days of the transfer.