Does Crawlspace Medic require a general release to be signed during a transfer?
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 general release is required from both the franchisee and the transferee as part of the transfer process. Specifically, both parties must sign a General Release in the form of Exhibit C to the Franchise Agreement.
This requirement means that as a selling franchisee, you will be releasing Crawlspace Medic from any potential future claims or liabilities related to the franchise. Similarly, the incoming franchisee also provides a release. This is a fairly standard practice in franchising to ensure a clean break and avoid future disputes after the transfer is completed.
In addition to the general release, several other conditions must be met for Crawlspace Medic to approve a transfer. These include Crawlspace Medic not exercising their right of first refusal, the transferee meeting the then-current standards for franchisees, the transferee signing the current Franchise Agreement (which may have different terms), completion of the Initial Training Program by the transferee, payment of all outstanding amounts owed to Crawlspace Medic and third-party creditors, subordination of any claims against the transferee, indemnification of Crawlspace Medic for three years post-transfer, and approval of the transfer terms. A transfer fee is also required, the amount of which depends on whether the transfer is to someone new to the brand or an existing owner.