Under what conditions can Crave refuse to permit a transfer of ownership of a Crave franchise in Michigan?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
(i) Failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Michigan franchisees have specific protections regarding the transfer of ownership. Crave can only refuse a transfer for "good cause." This stipulation is in place to protect the franchisee from arbitrary denial of a transfer.
The FDD specifies examples of what constitutes "good cause". These include if the proposed transferee fails to meet Crave's then-current reasonable qualifications or standards, if the proposed transferee is a competitor of Crave, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, or if the franchisee or proposed transferee fails to pay any sums owing to Crave or to cure any default in the franchise agreement existing at the time of the proposed transfer.
It is important to note that even with these protections, Crave retains the right of first refusal to purchase the franchise. This means that even if a franchisee finds a suitable buyer, Crave can step in and purchase the franchise on the same terms. This is a common practice in franchising, allowing the franchisor to maintain control over the brand and its locations. Prospective franchisees in Michigan should carefully consider these conditions and understand their rights and obligations regarding franchise transfers.