Under what conditions can Deer Solution refuse a transfer of ownership of a franchise in Michigan?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
this Agreement including, but not limited to this Article 14.B. shall constitute a breach of this Agreement and shall convey to the transferee no rights or interests in this Agreement; and
- (5) In the event of a Transfer of this Agreement that is approved by Franchisor, Franchisee shall not be relieved of Franchisee's obligations under this Agreement whether said obligations accrued and/or arose prior to and/or after the date of Transfer.
14.C. CONDITIONS FOR APPROVAL OF TRANSFER
Provided Franchisee and each Owner and Spouse, respectively, are in substantial compliance with this Agreement and the Ancillary Agreements, and Franchisor does not elect to exercise Franchisor's right of first refusal as set forth in Article 14.F. below, Franchisor shall not unreasonably withhold its approval of a Transfer by Franchisee or an Owner. The proposed transferee (including such assignee's owner(s) and spouse(s) if the proposed transferee is a Corporate Entity) must be of good moral character, have sufficient business experience, aptitude, and financial resources to own and operate a Deer Solution Business, and otherwise meet Franchisor's then applicable standards for franchisees as determined by Franchisor in its sole, but reasonable discretion. Furthermore, the proposed transferee and the proposed transferee's owners and spouses may not own or operate, or intend to own or operate, a Competitive Business. Franchisee agrees that Franchisor may condition approval of a Transfer upon Franchisee's satisfaction (either before, or contemporaneously with, the effective date of the Transfer) of the following:
- (1) Franchisee must provide written notice to Franchisor of the proposed Transfer of this Agreement at least 30 days prior to the Transfer, and Franchisee must have also satisfied the obligations set forth in Article 14.F. below;
- (2) All accrued monetary obligations of Franchisee and all other outstanding obligations to Franchisor and/or Franchisor's affiliates under this Agreement and the Ancillary Agreements must be satisfied in a timely manner, and Franchisee must satisfy all trade, supplier, and vendor accounts and other debts, of whatever nature or kind, in a timely manner;
- (3) Franchisee, each Owner, and each Spouse must not be in default or material breach of this Agreement or the Ancillary Agreements;
- (4) The transferee shall be bound by all terms and conditions of this Agreement, and each owner of the transferee and their respective spouses shall personally execute the Franchise Owner and Spouse Agreement and Guaranty in the form attached to this Agreement as Exhibit 1;
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to the 2025 Deer Solution Franchise Disclosure Document, there are several conditions under which Deer Solution can refuse a transfer of ownership of a franchise. These conditions are applicable in Michigan due to the specific Michigan FDD Amendment included in the document. Deer Solution will not unreasonably withhold approval of a transfer if the franchisee and owners are in substantial compliance with the agreement, and Deer Solution does not exercise its right of first refusal.
Deer Solution can refuse a transfer if the proposed transferee does not meet the franchisor's current qualifications and standards. This ensures that any new franchisee is capable of maintaining the standards of the Deer Solution brand. A transfer can also be denied if the proposed transferee is a competitor of Deer Solution or a sub-franchisor, preventing potential conflicts of interest and protecting Deer Solution's market position. Additionally, Deer Solution can refuse a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring that the new franchisee is committed to adhering to the franchise agreement.
Furthermore, Deer Solution can refuse a transfer if the franchisee or proposed transferee has failed to pay any sums due or cure any default in the Franchise Agreement at the time of the proposed transfer. This protects Deer Solution's financial interests and ensures that all outstanding obligations are met before a transfer is approved. The proposed transferee must also be of good moral character, possess sufficient business experience, aptitude, and financial resources to operate a Deer Solution business, and must not own or operate a competitive business. These conditions collectively ensure that any transfer of ownership aligns with Deer Solution's standards and protects its interests.
It is important to note that the Michigan FDD Amendment prohibits certain unfair provisions that might appear in franchise documents, and these provisions are void and unenforceable. This includes prohibitions on joining franchisee associations, requirements to assent to releases that deprive rights, and terminations without good cause. Therefore, while Deer Solution has the right to refuse a transfer under certain conditions, these rights are limited by Michigan law to protect the franchisee.