factual

For Counselor Realty, what is the effect of a prior agreement on the current franchise agreement?

Counselor_Realty Franchise · 2025 FDD

Answer from 2025 FDD Document

extent caused by direct and proximate consequences of our negligence.

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. 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.
  • 9.3 Franchisee Death or Disability. 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.
  • 9.4 Transfer by Franchisor.

Source: Item 22 — CONTRACTS (FDD page 32)

What This Means (2025 FDD)

According to Counselor Realty's 2025 Franchise Disclosure Document, a prior agreement can affect the current franchise agreement in the context of transferring ownership. Specifically, if a franchisee proposes to transfer their interest in the Franchise Agreement, the Office, any Additional Office, any Extension Office, the Business, or a majority of the assets of these entities to a third party, Counselor Realty retains the right of first refusal. This means the franchisee must first offer to sell their interest to Counselor Realty on the same terms as the third-party offer.

Counselor Realty has 30 days to accept or reject the offer. If Counselor Realty accepts, the sale proceeds on the terms of the third-party offer, potentially with cash substituted for non-cash consideration. If Counselor Realty rejects the offer or fails to respond within 30 days, the franchisee is then free to proceed with the transfer to the third party, provided the transfer occurs within 60 days and adheres to the conditions outlined in Article 9 of the Franchise Agreement. This process ensures that Counselor Realty has the opportunity to maintain control over who joins their franchise system.

Furthermore, the 2025 FDD states that Counselor Realty's consent is not required for certain internal transfers, such as those that do not result in a change of control within the franchisee entity. However, even in these cases, the franchisee must provide Counselor Realty with written notice and relevant information about the transfer at least 30 days before it occurs. 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. These stipulations ensure that Counselor Realty is informed of changes in ownership and that the new owners are bound by the obligations of the Franchise Agreement.

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.