Does Dryject consider a gift of an interest in the franchise agreement a 'transfer'?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (viii) You shall not issue any additional stock, membership, or interests in You and no individual with ownership interest in You shall transfer, assign or pledge any ownership interest in You without Our prior written consent, which shall not be unreasonably withheld, and a legend setting forth such restriction on transfers shall be contained in the business entity's organizational and governing documents and other appropriate documents such as certificates and stocks. In giving Our consent, We shall have the right
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
The 2025 Dryject Franchise Disclosure Document addresses restrictions on transferring ownership interests in the franchise. If the franchisee is a business entity, the FDD states that no individual with ownership interest in the entity can transfer, assign, or pledge any ownership interest without Dryject's prior written consent. This restriction must also be noted in the business entity's organizational documents. While the FDD does not specifically use the word 'gift', transferring ownership by gifting would likely be considered a transfer that requires consent.
Dryject requires that if the franchisee is an individual, the grant of the license is made in reliance on the individual's personal attributes. If the franchisee is a business entity, each person with a 20% or greater ownership interest must sign a Guaranty Agreement. This indicates Dryject's concern with who owns and controls the franchise.
Because the FDD does not explicitly state that a gift of interest is considered a transfer, prospective franchisees should seek clarification from Dryject on whether gifting an interest in the franchise is considered a transfer requiring franchisor approval. Understanding Dryject's specific policies on gifting ownership interests is crucial for franchisees planning their estate or business succession.