What section of the Counselor Realty franchise agreement outlines the standards for transferring the franchise?
Counselor_Realty Franchise · 2025 FDDAnswer 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.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, the standards for transferring a franchise are detailed in Section 9.1 of Item 22, which covers contracts. This section stipulates that a franchisee cannot directly or indirectly change the ownership or control of their interest in the agreement, the office, any additional office, any extension office or business, or a majority of the assets of the office without first offering Counselor Realty the right of first refusal. If Counselor Realty declines to exercise this right, the franchisee must obtain Counselor Realty's consent and meet specific conditions before proceeding with the transfer.
The franchisee and the proposed transferee must adhere to the procedures outlined in Section 9.2. The transferee is typically required to sign the then-current form of the Counselor Realty Franchise Agreement for the remaining term, unless the transfer involves ownership interest within an existing franchisee entity. Counselor Realty will grant consent to the transfer if the conditions within the agreement are met and if Counselor Realty believes the transferee is qualified to operate the business in accordance with the agreement.
There is an exception where Counselor Realty's consent and right of first refusal are not required for certain transfers of ownership interest, provided that the transfer does not result in a change of control of the franchisee. In such cases, the franchisee must provide written notice to Counselor Realty at least 30 days before the transfer, along with necessary information about the transfer and transferee. If the transfer involves an ownership interest in the franchisee, the transferee must execute and deliver a guaranty to Counselor Realty within ten days of the transfer.
For further clarification, "Control" is defined as the direct or indirect ownership or control of a majority of the voting ownership of the entity, or the power to direct the management and policies of the entity. This definition is important for franchisees to understand when considering any changes in ownership or management structure.