Are the transferee's owners and their spouses required to personally guarantee the Deck Medic Franchise Agreement?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
| k. | "Transfer" by franchisee definition | 14.B. | A transfer means and includes, whether voluntary or involuntary, conditional or unconditional, direct or indirect: (a) an assignment, sale, gift, transfer, pledge or sub franchise; (b) the grant of a mortgage, charge, lien or security interest, including, without limitation, the grant of a collateral assignment; (c) a merger, consolidation, exchange of shares or other ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or redemption of ownership interests; and (d) a sale or exchange of voting interests or securities convertible to voting interests, or an agreement granting the right to exercise or control the exercise of the voting rights of any holder of ownership interests or to control the operations or affairs of Franchisee. |
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| 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). |
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, if a franchisee seeks to transfer their franchise, the transferee's owners and their spouses must personally guarantee all the terms and provisions of the Franchise Agreement. This requirement is one of several conditions that Deck Medic outlines for approving a franchise transfer.
Other conditions for Deck Medic's approval include providing 30 days' prior written notice, ensuring that the franchisee and their owners are not in default or in breach of any obligations under the Franchise Agreement, and obtaining a general release in favor of Deck Medic from the franchisee, their owners, and their spouses. The transfer must also 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.
Furthermore, the transferee and their owners and managers must complete Deck Medic's training programs at their own expense. Deck Medic must waive their right of first refusal and provide written approval of the transfer and transferee, subject to their discretion. Finally, the franchisee must pay the Transfer Fee, subject to applicable state laws.
This guarantee ensures that Deck Medic has recourse against the personal assets of the new owners and their spouses if the franchise fails to meet its obligations under the Franchise Agreement. This is a fairly standard practice in franchising, as it provides an additional layer of security for the franchisor.