If a Crawlspace Medic franchisee wants to transfer their franchise, can Crawlspace Medic withhold consent?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
| l. | Franchisor approval of transfer by franchisee | | No transfer is allowed without our consent, which we will not unreasonably withhold. | | 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 owne
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 is not allowed to transfer their franchise without the franchisor's consent. However, Crawlspace Medic will not unreasonably withhold its consent.
To gain approval for a transfer, several conditions must be met. Crawlspace Medic must decide not to exercise its right of first refusal. The proposed transferee must meet Crawlspace Medic's current standards for franchisees and sign the then-current Franchise Agreement, which may have different terms than the original agreement. The transferee must also complete the Initial Training Program.
Additionally, the franchisee must have paid all outstanding amounts to Crawlspace Medic and third-party creditors. Both the franchisee and the transferee must sign a General Release. The franchisee must subordinate any claims against the transferee to Crawlspace Medic and indemnify Crawlspace Medic for three years following the transfer. Crawlspace Medic must also approve the material terms of the transfer. Finally, the franchisee must pay a transfer fee. This fee is sixty percent of the then-current franchise fee if the transfer is to someone new to the brand, or forty percent if the transfer is to an existing owner.