Under what circumstances can Crown Gold Exchange refuse to permit a transfer of ownership of a franchise?
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
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to the 2024 Crown Gold Exchange Franchise Disclosure Document, specifically regarding Michigan franchisees, Crown Gold Exchange can refuse a transfer of ownership of a franchise for good cause. The FDD does not elaborate on what constitutes "good cause" in this context.
However, the disclosure clarifies that this refusal does not prevent Crown Gold Exchange from exercising a right of first refusal to purchase the franchise. This means that even if a franchisee finds a buyer, Crown Gold Exchange has the option to buy the franchise themselves under the same terms offered by the third party.
It is important to note that this specific provision applies to franchise agreements in Michigan. Prospective franchisees in other states should review their specific franchise agreements and applicable state laws to understand the conditions under which Crown Gold Exchange can refuse a transfer of ownership. Franchisees should seek clarification from Crown Gold Exchange regarding what specific factors or circumstances would constitute "good cause" for denying a transfer.