Under what conditions does Crawlspace Medic require franchisor approval for a transfer?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| 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%) 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 transfer to a spouse, parent or child upon death or permanent disability of the current Franchisee. |
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, any transfer of interest in the Franchise Agreement, the Franchised Business, or its assets requires franchisor approval. This includes assignments, sales, gifts, or encumbrances. However, Crawlspace Medic will not unreasonably withhold consent for a transfer.
To gain approval for a transfer, Crawlspace Medic requires that they do not exercise their right of first refusal. The potential transferee must meet the then-current standards for new franchisees, which includes signing the current Franchise Agreement (potentially with materially different terms), and completing the Initial Training Program. The franchisee must have paid all outstanding amounts owed to Crawlspace Medic and third-party creditors. Both the franchisee and 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. A transfer fee is required, which is sixty percent of the current franchise fee for new franchisees, forty percent for existing owners, or $1,500 for transfers between existing owners or adding a new shareholder that does not change majority ownership. No fee is required for transfers to a spouse, parent, or child upon death or permanent disability.