What authorization must the assignee entity have in the state where the Exit Protected Territory is located?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee desires to do business as a corporation, partnership or limited liability company, EXIT or Subfranchisor will give its written consent to the assignment of this Agreement to such entity only under the following terms and conditions:
- (A) If Franchisee is a corporation, partnership, or limited liability company, it must possess a valid real estate broker's License in the state or states where the Protected Territory is located.
- (B) All individuals executing this Agreement shall remain personally liable for the performance of all obligations under this Agreement, irrespective of the formation of the entity and all equity holders of the assignee entity who have not signed this Agreement shall execute the Personal Guaranty in the form attached as Schedule 4.
- (C) The assignee entity must be legally authorized to do business in the state(s) where the Protected Territory is located and shall at all times maintain itself in good standing in the state(s).
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, if a franchisee wishes to assign their franchise agreement to a corporation, partnership, or limited liability company, that entity must be legally authorized to conduct business in the state where the Exit Protected Territory is located. Additionally, the entity must maintain good standing in that state. This is a condition for Exit or its subfranchisor to provide written consent for the assignment.
This requirement ensures that the entity taking over the franchise is legally compliant and capable of operating in the designated territory. It protects Exit by ensuring the franchisee is a legitimate business operating within the bounds of the law.
Furthermore, if the franchisee is a corporation, partnership, or limited liability company, it must possess a valid real estate broker's license in the state or states where the Protected Territory is located. This ensures that the entity is qualified to conduct real estate services in the territory. All individuals executing the agreement remain personally liable for the performance of all obligations under the agreement, irrespective of the formation of the entity. All equity holders of the assignee entity who have not signed the agreement must execute a personal guaranty.
These stipulations are designed to maintain the integrity and legal standing of the Exit franchise within its designated territory, safeguarding the brand's reputation and operational standards.