What financial obligations must be satisfied before a Crawlspace Medic franchise transfer can be approved?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
ithout our consent, which we will not unreasonably withhold. |
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| m. | Conditions for franchisor approval of a transfer | Section 16.3 and 16.4 | Conditions include: our decision not to exercise our right of first refusal; transferee meets our then-current standards for qualifying franchisees; transferee signs our then-current form of Franchise Agreement, which may have materially different terms from your Franchise Agreement; transferee successfully complete our Initial Training Program; you have paid us and third-party creditors all amounts owed; you and the transferee sign a General Release in the form of Exhibit C to the Franchise Agreement; you shall subordinate any claims you have against the transferee to us; you will indemnify us for a period of 3 years following the transfer; our approval of the material terms and conditions of the transfer; payment of a transfer fee equal to sixty percent (60%) of the then current franchise fee for a transfer to an individual or entity that is new to the brand, or forty percent (40%) of the then current franchise fee for a transfer to an existing owner within the system, or $1,500 for a transfer between existing owner or adding a new shareholder that does not change the majority ownership, or no payment for a transfe |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–38)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, a franchisee must meet certain financial obligations before a transfer of the franchise is approved. Specifically, the franchisee must have paid all amounts owed to Crawlspace Medic and any third-party creditors. This ensures that all outstanding debts related to the franchise are settled before the transfer takes place.
In addition to settling outstanding debts, the transferring franchisee must also pay a transfer fee. The amount of this fee depends on the nature of the transfer. If the transfer is to an individual or entity that is new to the Crawlspace Medic brand, the transfer fee is equal to sixty percent (60%) of the then-current franchise fee. For a transfer to an existing owner within the Crawlspace Medic system, the fee is forty percent (40%) of the then-current franchise fee. A lower fee of $1,500 applies for transfers between existing owners or when adding a new shareholder that does not change the majority ownership. No transfer fee is required for transfers to a spouse, parent, or child upon the death or permanent disability of the current franchisee.
These conditions ensure that Crawlspace Medic maintains financial stability and control over who enters the franchise system. The transfer fees can be a significant cost for the franchisee, especially if the transfer is to someone new to the brand. Prospective franchisees should consider these costs when planning for the future sale of their franchise. The requirement to settle all outstanding debts is a standard practice in franchising to protect the franchisor and any involved third parties.