Does Crawlspace Medic have any restrictions on assigning its contract?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| j. | Assignment of contract by franchisor | Section 16.1.1 | No restrictions on our right to assign. |
| k. | "Transfer" by franchisee defined | Section 16.3 | Any assignment, sale, transfer, gift, devise or encumbrance of any interest in the Franchise Agreement, the Franchised Business, any assets of the Franchised Business, or in the Franchisee (if the Franchisee is a business entity). |
| 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%) |
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, Crawlspace Medic itself faces no restrictions on assigning its franchise agreement. However, a franchisee is not allowed to transfer the agreement without the franchisor's consent, which Crawlspace Medic states it will not unreasonably withhold.
The FDD defines 'transfer' broadly. It includes any assignment, sale, transfer, gift, or encumbrance of any interest in the Franchise Agreement, the Franchised Business, or its assets, and also any interest in the franchisee itself if the franchisee is a business entity.
Crawlspace Medic requires certain conditions to be met before it will approve a transfer. These conditions include Crawlspace Medic's decision not to exercise its right of first refusal, the transferee meeting Crawlspace Medic's standards for franchisees, the transferee signing the current Franchise Agreement (which may have different terms), the transferee completing initial training, all outstanding amounts owed to Crawlspace Medic and third parties being paid, both parties signing a General Release, the franchisee subordinating any claims against the transferee to Crawlspace Medic, the franchisee indemnifying Crawlspace Medic for three years post-transfer, approval of the transfer's material terms, and payment of a transfer fee equal to sixty percent (60%).