Is a transfer of ownership rights in a Crawlspace Medic franchisee LLC considered a transfer?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2. Restrictions on Transfers by Franchisee. Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee. Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval. Franchisor may void any transfer made without such approval.
- 16.3.
Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, any transfer of ownership rights requires the franchisor's approval. Crawlspace Medic considers the rights and duties under the Franchise Agreement to be personal to the franchisee as it is organized, including the Principals of the business as they exist when the agreement is executed. Crawlspace Medic enters into the agreement based on their assessment of the character, skills, aptitude, business ability, and financial capacity of the franchisee.
Therefore, according to the FDD, a transfer includes directly or indirectly selling, assigning, transferring, giving, devising, conveying, or encumbering the Franchise Agreement or any right or interest in it. This also applies to the Franchise, the Franchised Business, or any assets thereof, except in the ordinary course of business. Furthermore, it includes any such assignment, transfer, or encumbrance that occurs by operation of law.
This means that if a franchisee wants to transfer ownership, they must first obtain written consent from Crawlspace Medic. Crawlspace Medic retains the right to void any transfer made without their prior approval. This provision allows Crawlspace Medic to maintain control over who operates a franchise and ensures that new owners meet their standards.