Does Cr3 American Exteriors have the right to approve all transfers of franchise interests?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
of Section 7.8.
- (v) you sign the then current transfer and release form,
- (vi) you provide to us a copy of the proposed transaction documents,
- (vii) you pay to use the Transfer Fee,
- (viii) Transferee obtains the necessary licenses and permits to conduct business,
- (ix) you obtain any landlord approval if the facility lease is being transferred,
7.3. Joint Tenancy
If this Agreement is held by joint tenants or tenants in common, all joint tenants or tenants in common must join in any transfer of an ownership interest in this Agreement, except any person who is deceased or under a legal disability.
7.4. Transfer to Controlled Entity
A "Controlled Entity" is an entity in which you are the beneficial owner of 100% of each class of voting ownership interest. A transfer to a Controlled Entity shall not trigger the Right of First Refusal, described in Section 7.6 below. At the time of the desired transfer of interest to a Controlled Entity, you must notify us in writing of the name of the Controlled Entity and the name and address of each officer, director, shareholder, member, partner, or similar person and their respective ownership interest. We do not charge a Transfer Fee for this change.
7.5. Transfer within an Entity
A transfer of interest within an entity shall not trigger the Right of First Refusal described in Section 7.6 below if only the percentage ownership, rather than the identity of the owners, is changing. Prior to the time of the desired transfer of interest within an entity, you must notify us in writing of the name and address of each officer, director, shareholder, member, partner or similar person and their respective ownership interest. Each such person of the Controlled Entity shall sign the then current amendment and release forms and/or Franchise Agreement as required by us, and you shall pay to us the applicable Transfer Fee.
7.6. Right of First Refusal
A.
Source: Item 23 — RECEIPTS (FDD pages 53–150)
What This Means (2025 FDD)
According to the 2025 FDD, Cr3 American Exteriors has specific rights regarding the transfer of franchise interests. If a franchisee receives a legitimate offer to purchase or transfer their agreement, Cr3 American Exteriors has the first right of refusal, allowing them to purchase the franchise business under the same terms as the third-party offer. The franchisee must provide Cr3 American Exteriors with a copy of the offer within 14 days, giving them the opportunity to exercise this right.
There are exceptions to this right of first refusal. A transfer to a "Controlled Entity," defined as an entity where the franchisee owns 100% of the voting interest, does not trigger the right of first refusal, nor does a transfer of interest within an entity if only the percentage ownership is changing. However, Cr3 American Exteriors must be notified in writing about these transfers, including the names and addresses of all relevant parties and their ownership interests. In the case of a transfer within an entity, all individuals involved must sign the current amendment and release forms and/or Franchise Agreement, and the franchisee must pay the applicable transfer fee.
If the franchise agreement is held by joint tenants or tenants in common, all parties must participate in any transfer of ownership, unless they are deceased or legally disabled. This ensures that all parties with an interest in the franchise are in agreement regarding its transfer. These stipulations are typical in franchise agreements to allow the franchisor to maintain control over who enters the system and to ensure brand consistency and quality.