What documentation must a Counselor Realty franchisee provide to Counselor Realty when proposing a transfer to a third party?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
the requirements of this Agreement and then-current System standards.
9.6 Right of First Refusal. If you (or any subsequent Franchisee) propose a transfer governed by this Article 9, in whole or in part, to any third party in response to a bona fide offer from such third party, you shall first offer to sell to Counselor your said interest as provided herein. You shall obtain from the third party offeror and deliver to us a statement in writing, signed by the offeror and by you of all of the terms of the offer. Counselor has 30 days from its receipt of the statement to accept the offer by delivering written notice of acceptance to you. The acceptance shall be on the same price and terms stated in the third party offer except that Counselor may confer with you and the proposed transferee and negotiate the terms of the proposed transfer without thereby impairing the right of first refusal, and Counselor may substitute cash in the fair market value of any non-cash consideration offered by the third party. If Counselor fails to accept the offer within the 30-day period, you shall be free for 60 days after such period to effect the disposition described in the statement delivered to Counselor provided that such transfer is in accordance with Article 9 of this Agreement; but you shall effect no other or subsequent sale or assignment of this Agreement or the business conducted hereunder without first offering the same to Counselor in accordance with this paragraph.
10. RESOLUTION OF DISPUTES.
- 10.1 Arbitration. Except as provided below, any dispute arising under or in relation to this Agreement shall be resolved by binding arbitration by the National Center for Dispute Settlement, under its rules for expedited commercial arbitration, in Minneapolis, Minnesota. Each claim or controversy will be arbitrated by Franchisee on an individual basis, and will not be consolidated in any arbitration action with the claim of any other franchisee. The award of the arbitrators is final and binding on all parties. The arbitrators may issue appropriate orders as well as award monetary (but not exemplary or punitive) damages. The prevailing party will be entitled to recover its costs including its reasonable attorneys' fees. We may sue to collect money owed to us, to protect or enforce our rights in the Marks, or to compel inspections or audits.
- 10.2 Injunctive Relief. Your breach of this Agreement could cause irreparable damage to Counselor or to other franchisees.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to the 2025 Counselor Realty Franchise Disclosure Document, if a franchisee proposes to transfer their interest to a third party, they must first offer to sell their interest to Counselor Realty. To do this, the franchisee must obtain a written statement from the third-party offeror, signed by both the offeror and the franchisee, that includes all the terms of the offer. This statement must then be delivered to Counselor Realty.
Counselor Realty then has 30 days to accept the offer by providing written notice of acceptance to the franchisee. The acceptance will be based on the same price and terms stated in the third-party offer. Counselor Realty can negotiate the terms of the proposed transfer with the franchisee and the proposed transferee without affecting their right of first refusal. Counselor Realty can also substitute cash for the fair market value of any non-cash consideration offered by the third party.
If Counselor Realty does not accept the offer within the 30-day period, the franchisee has 60 days to complete the transfer to the third party, as long as the transfer complies with Article 9 of the Franchise Agreement. The franchisee cannot make any other or subsequent sale or assignment of the agreement or the business without first offering it to Counselor Realty again following the same procedure.
Additionally, even if Counselor Realty's consent is not required for certain transfers of ownership interests that do not result in a change of control, the franchisee must still provide Counselor Realty with written notice of the transfer, along with any other information Counselor Realty may require, at least 30 days before the transfer. If the transfer involves an ownership interest in the franchisee, the transferee must execute and deliver a guaranty to Counselor Realty within 10 days of the transfer.