What specific actions are considered a 'change in Control' of a Counselor Realty franchisee?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, a change in control involves altering the ownership or control of several aspects of the franchise. This includes the franchisee's interest in the Franchise Agreement itself, the physical office, any additional or extension offices, the business assets, or the ownership interest in the franchisee entity. Essentially, any shift that affects who ultimately directs the franchise's operations or owns a majority stake is considered a change in control.
For a prospective Counselor Realty franchisee, this means that any plan to sell the business, bring in a new partner with a controlling interest, or transfer ownership within a corporate entity requires careful consideration. Counselor Realty retains the right of first refusal to acquire the franchise under the same terms offered to a third party. If Counselor Realty declines, the franchisee must obtain Counselor Realty's consent for the transfer, and the transferee must meet Counselor Realty's qualifications and sign the current franchise agreement.
The FDD specifies that "Control" means 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. The franchisee must submit a written notice of the pending transfer at least 60 days before the proposed transfer date. A transfer fee of $2,000 applies to all transfers, with some exceptions as described in Section 9.1. Additionally, the death, disability, or incapacity of the franchisee (or a principal officer, director, or partner if the franchisee is an entity) is also considered a transfer, requiring the executor, heir, or legal representative to apply for consent within 60 days.