In Michigan, what are some examples of 'good cause' for Embassy Suites to refuse a transfer of ownership?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 97–305)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, several conditions constitute 'good cause' for refusing a transfer of ownership in Michigan. These protections are mandated by Michigan state law to protect franchisees.
Specifically, Embassy Suites can refuse a transfer if the proposed transferee does not meet the brand's current reasonable qualifications or standards. This ensures that any new owner is capable of maintaining the quality and standards of the Embassy Suites brand. Another cause for refusal is if the proposed transferee is a competitor of Embassy Suites, preventing potential conflicts of interest and protecting proprietary information.
Additionally, Embassy Suites can block a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the Franchise Agreement. Finally, failure by the franchisee or proposed transferee to pay any outstanding sums to Embassy Suites or to resolve any existing default in the Franchise Agreement at the time of the proposed transfer also constitutes sufficient cause for refusal. These stipulations aim to maintain the financial stability and legal compliance of Embassy Suites franchises.