Can Deck Medic withhold approval of a franchisee transfer at its discretion?
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.
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, Deck Medic has the authority to approve or deny a franchisee's transfer request at its discretion. This means that even if a franchisee meets all the stated conditions for a transfer, Deck Medic can still withhold approval.
Several conditions must be met to gain approval for a transfer. The franchisee must provide 30 days' prior written notice. The franchisee and their owners must be in compliance with the franchise agreement. The new transferee must agree to be bound by the franchise agreement, and their owners must also guarantee the agreement. The franchisee, their owners, and their spouses must sign a general release in favor of Deck Medic. The transfer must include the approved location, and the transferee must continue using that location. The assets of the franchised business must be transferred, and the transferee's owners and managers must complete Deck Medic's training programs at their own expense. Deck Medic must waive its right of first refusal and approve the transfer and transferee in writing. Finally, the franchisee must pay the transfer fee, subject to applicable state laws.
This discretionary power gives Deck Medic significant control over who becomes a franchisee within their system. While many franchise agreements contain stipulations that must be met for a transfer to be approved, the added ability to deny a transfer at their discretion provides an additional layer of protection for Deck Medic. Prospective franchisees should carefully consider this provision and understand that even if they find a qualified buyer, Deck Medic ultimately decides whether the transfer can proceed.
It is important for potential franchisees to discuss the transfer process and the criteria Deck Medic uses to evaluate potential transferees. Understanding Deck Medic's perspective on what makes a suitable franchisee can help in the long run if the franchisee decides to sell the business.