Can a Counselor Realty franchisee change ownership or control of the Business without consent?
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 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 24–25)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, franchisees generally need to obtain consent from Counselor Realty to transfer their interest in the Franchise Agreement, the Office, any Additional Office, any Extension Office or Business, or a majority of the assets of the Office, any Additional Office, any Extension Office or Business. If the franchisee is an entity, they need consent for any transfer of an ownership interest in, or Control of, the Franchisee or any direct or indirect owner of Franchisee. This is a standard clause in most franchise agreements, allowing the franchisor to maintain control over who operates their branded businesses.
Counselor Realty will grant consent to a transfer if the conditions specified in the Franchise Agreement are met and if the transferee is qualified to operate the Business in compliance with the agreement, in Counselor Realty's opinion. The FDD specifies that Counselor Realty also has the right of first refusal to acquire the franchise if the franchisee decides to sell. This means that before a franchisee can sell to a third party, Counselor Realty has the opportunity to match the offer and purchase the franchise themselves.
However, Counselor Realty's consent is not required for certain transfers of ownership interests in the franchisee entity, provided that the transfer does not result in a change of Control of the Franchisee or its direct or indirect owner. In such cases, the franchisee must provide Counselor Realty with written notice at least thirty (30) days before the transfer, along with any information Counselor Realty may require. Additionally, if the transfer involves an ownership interest in the Franchisee, the transferee must execute and deliver a guaranty to Counselor Realty within ten (10) days of the transfer.
Item 17 of the 2025 FDD summarizes these transfer conditions, noting that Counselor Realty has the right to consent to all transfers (other than a transfer of less than a majority interest in your business entity or your owners) and will consent if Counselor Realty deems the transferee qualified and the conditions specified in the Franchise Agreement are satisfied. Conditions for approval include the transferee qualifying, payment of a transfer fee, payment of all amounts owing, renovation to then-current System standards, and execution of a guaranty by the buyer's shareholders or owners.