Under what conditions can Degree Wellness unreasonably withhold consent to the transfer of a franchise in Minnesota?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
With respect to franchises governed by Minnesota law, Franchisor will comply with Minn. Stat. § 80C.14, subds. 3, 4, and 5, which require, except in certain specified cases, that (1) Franchise Owner be given ninety (90) days' notice of termination (with sixty (60) days to cure) and one-hundred eighty (180) days' notice for non-renewal of the Agreement and (2) consent to the transfer of a franchise by Franchise Owner will not be unreasonably withheld whenever the franchisee to be substituted meets the present qualifications and standards required of the franchisees by us.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, specifically the Minnesota Amendment to the Franchise Agreement, Degree Wellness must comply with Minn. Stat. § 80C.14, subds. 3, 4, and 5 regarding franchise transfers in Minnesota. This statute dictates that Degree Wellness cannot unreasonably withhold consent to a franchise transfer if the proposed new franchisee meets the brand's current qualifications and standards. This provision aims to protect the franchisee's ability to sell their business to a qualified buyer.
In practical terms, this means that if a Degree Wellness franchisee in Minnesota finds a buyer who meets the franchisor's then-current criteria for new franchisees, Degree Wellness is legally obligated to approve the transfer. The brand cannot arbitrarily deny the transfer based on reasons unrelated to the buyer's qualifications. This ensures that franchisees have a fair opportunity to recoup their investment when they decide to sell their business.
However, it's important to note the phrase "present qualifications and standards." Degree Wellness retains the right to set and update its standards for franchisees. As long as these standards are applied consistently and are not designed to unfairly prevent transfers, Degree Wellness can deny a transfer if the buyer does not meet those standards. A prospective franchisee should carefully review the current franchisee qualifications and standards to understand the criteria a potential buyer will need to meet. This information is crucial for planning an exit strategy and ensuring a smooth transfer process in the future.