What constitutes 'good cause' for Crown Gold Exchange to refuse a transfer of ownership in Michigan?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from
exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, Michigan law stipulates specific conditions under which Crown Gold Exchange can refuse a transfer of ownership. These conditions are considered 'good cause' and are explicitly defined to protect franchisees.
Specifically, Crown Gold Exchange can refuse a transfer if the proposed new owner doesn't meet the brand's current standards, is a direct competitor, or refuses to comply with all legal obligations in writing. Additionally, if the franchisee or potential new owner owes money to Crown Gold Exchange or hasn't fixed a default in the franchise agreement at the time of the proposed transfer, the transfer can be denied.
This protection ensures that franchisees in Michigan are not unfairly restricted in their ability to sell their business. However, it also provides Crown Gold Exchange with legitimate reasons to maintain brand standards and protect its interests by carefully vetting potential new owners. Franchisees should be aware of these conditions and ensure any potential buyer is fully qualified and financially sound to avoid transfer issues.