Does Devon Creek have to approve the replacement franchisee in the event of death or disability?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| n. | Franchisor's right of first refusal to acquire franchisee's business | Section 16.6 | Summary You must promptly notify us of any written offer to purchase your Franchise. We have fifteen (15) days to exercise our first right to buy it on the same terms and conditions, provided that (a) we may substitute cash for any other consideration, (b) we may pay the entire purchase price at closing, (c) our credit is deemed as good as the proposed purchaser, |
| Enoughison's oution to muchoso | Section 18.2 | (d) we have at least thirty (30) days to close and (e) you shall give us all customary seller's representations and warranties. | |
| 0. | Franchisor's option to purchase franchisee's business | Upon termination of the Franchise Agreement, we have the option to purchase your equipment, signs, advertising materials, supplies and inventory at your cost or fair market value, whichever is less. | |
| p. | Death or disability of franchisee | Sections 16.3, 16.4 and 16.7 | The Franchise Agreement will terminate automatically upon your death or permanent disability, unless prohibited by law and the Franchise is transferred within three (3) months to a replacement franchisee that we approve. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 37–42)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, in the event of the death or permanent disability of a franchisee, the franchise agreement will terminate automatically unless prohibited by law. To avoid termination, the franchise must be transferred within three months to a replacement franchisee that Devon Creek approves.
This means that if a Devon Creek franchisee dies or becomes permanently disabled, their business can only continue operating under a new franchisee if Devon Creek gives its explicit consent. The successor must be approved by Devon Creek within a strict three-month timeframe.
This provision protects Devon Creek's brand and ensures that any new franchisee meets their standards. It is a fairly standard clause in franchise agreements, as franchisors typically want to maintain control over who operates their branded businesses. A prospective franchisee should inquire about the criteria Devon Creek uses to approve replacement franchisees in such cases to better understand the process.