Besides curing defaults, what financial obligations must an Exit franchisee fulfill to transfer the franchise?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
nds for termination of this Agreement by Subfranchisor.
18.3. Consent to Transfer Conditions
Subfranchisor will not unreasonably withhold its consent, which consent must be in writing, to any proposed Transfer, provided Franchisee and/or the transferee comply with the following, non-exclusive, conditions:
- (A) Franchisee shall have fully complied with the provisions of this Agreement, curing all defaults and noncompliance under this Agreement and any other franchise agreements it may have with Subfranchisor and EXIT; and
- (B) Franchisee shall have paid fully all monies due EXIT, Subfranchisor, and Brokers' Council;
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee looking to transfer their franchise must meet several financial obligations. In addition to curing all defaults and noncompliance under the Franchise Agreement, the franchisee must have fully paid all monies due to EXIT, the Subfranchisor, and the Brokers' Council. This ensures that all outstanding debts and financial responsibilities to the various involved parties are settled before the transfer can proceed.
Furthermore, the franchisee is required to pay the transfer fee as stipulated in Section 18.5 of the agreement. This fee likely covers the administrative and legal costs associated with processing the transfer. The franchisee must also close all transactions under contract at the time of termination through EXIT's proprietary system "MEMO" and pay all company development fees, transaction fees, and regional development fees that are due. This ensures that all ongoing business is properly accounted for and that all applicable fees are paid up to the point of transfer.
These financial obligations are typical in franchise agreements to protect the franchisor's financial interests and ensure a smooth transition. Prospective Exit franchisees should carefully review these requirements and factor them into their decision-making process, as failing to meet these obligations can prevent the transfer of the franchise. It is also important to note that these are non-exclusive conditions, and the Subfranchisor may have additional requirements.