Within what timeframe must a Crawlspace Medic franchise be transferred after the franchisee's death or disability?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
| 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 transfer to a spouse, parent or child upon death or permanent disability of the current Franchisee. |
| n. o. | Franchisor's right of first refusal to acquire franchisee's business Franchisor's option to purchase franchisee's business | Section 16.6 Section 18.2 | You must promptly notify us of any written offer to purchase your Franchise. We have 30 days to exercise our first right to buy it on the same terms and conditions, provided that (a) we may substitute cash for any other consideration (b)we may pay the entire purchase price at closing, (c) our credit is deemed as good as the proposed purchaser, (d) we have at least 60 days to close and (e) you shall give us all customary seller's representations and warranties. Upon termination of the Franchise Agreement, we have the option to purchase your, equipment, signs, advertising materials, supplies, and inventory at your cost or fair market value, whichever is less. We have the option of purchasing the vehicle for the lesser of its current market value or $5,000.00. |
| p. | Death or disability of franchisee | Sections 16.3, 16.4 and 16.7 | The Franchise Agreement will terminate automatically upon your death or permanent disability, unless prohibited by law and the Franchise is transferred within 6 months to a replacement franchisee that we approve. |
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, if a franchisee dies or becomes permanently disabled, the Franchise Agreement will terminate automatically unless prohibited by law. To avoid termination, the franchise must be transferred within 6 months to a replacement franchisee approved by Crawlspace Medic.
This requirement ensures that the Crawlspace Medic business continues operations without significant interruption and maintains brand standards. The successor franchisee must meet Crawlspace Medic's approval, indicating they must satisfy the then-current standards for franchisees.
For a prospective Crawlspace Medic franchisee, this means having a succession plan in place is crucial. This plan should identify potential candidates who could take over the franchise in the event of death or disability, and ensure these candidates meet Crawlspace Medic's criteria for approval. This could involve family members or business partners who are already familiar with the business or are willing to undergo the necessary training and meet the franchisor's requirements. The relatively short, six-month window underscores the importance of proactive planning.
It is also important to note that Crawlspace Medic's approval of the replacement franchisee is required, and the successor will need to meet the then-current standards for franchisees. This could include completing the initial training program and signing the then-current form of the Franchise Agreement, which may have materially different terms. Therefore, potential successors should be prepared to meet these requirements to ensure a smooth transfer of the franchise.