If a Deck Medic franchisee is in default, can they transfer their franchise?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
----------------------------------------------------------------------------------------| | l. | Franchisor's approval of transfer by franchisee | 14.B. | Transfers require our prior written consent, which may be granted or withheld in our discretion. | | m. | Conditions for franchisor's approval of transfer | 14.C. | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners and their spouses must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferee's continued use and occupancy of such location throughout the term of the Franchise Agreement; the assets of the Franchised Business must be transferred to the transferee; the transferee and the transferee's owners and managers, at the transferee's expense, must complete our training programs; we waive our right of first refusal; we approve of the transfer and transferee in writing and subject to our discretion; and you pay the Transfer Fee (subject to applicable state laws). | | n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. | We have the right to match any offer to purchase your Deck Medic Business or the Corporate Entity operating your Deck Medic Business. | | o. | Franchisor's option to purchase franchisee's business | Not applicable | Not applicable. | | p. | Death or disability of franchisee | 14.D. | If you are an individual, within 30 days of your death or permanent disability, your executor and/or legal representative must appoint an Operating Manager approved by us and within 60 days of such appointment the Operating Manager must complete, to our satisfaction, our |
| q. | Non-competition covenants during the term of the franchise | 6 | No involvement in any competitive business and must comply with confidentiality, non-disclosure and non solicitation covenants.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 34–39)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, a franchisee's ability to transfer the franchise is contingent upon several conditions, one of which is being in compliance with the Franchise Agreement. Specifically, the FDD states that to gain approval for a transfer, the franchisee and their Owners must not be in default of their obligations under the Franchise Agreement and all other agreements with Deck Medic, and they must be in compliance with all obligations under these agreements.
This stipulation means that if a Deck Medic franchisee is in default, they would not meet the conditions required for franchisor approval of the transfer. Deck Medic retains the discretion to grant or withhold consent for any transfer. The FDD outlines a comprehensive definition of what constitutes a transfer, including assignments, sales, gifts, pledges, sub-franchises, mortgages, and changes in ownership interests.
For a prospective Deck Medic franchisee, this underscores the importance of maintaining compliance with all contractual obligations. Failure to do so not only risks termination of the franchise agreement but also eliminates the option of selling the business to mitigate losses or recoup investment. The franchisee must ensure all payments are current, operational standards are met, and all legal and regulatory requirements are followed to remain in good standing and retain the right to transfer the franchise in the future.
It is also important to note that even if a franchisee is not in default, Deck Medic has the right of first refusal to match any offer to purchase the Deck Medic Business. This means that even if a franchisee finds a suitable buyer and meets all the conditions for transfer, Deck Medic has the option to purchase the business themselves, potentially affecting the franchisee's exit strategy and the terms of the sale.