What constitutes a Major Transfer for an Exit franchise, triggering the higher transfer fee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
.3](#page-71-1) of this Agreement. The disposition shall be completed within a reasonable time, not to exceed nine (9) months from the date of the death or permanent disability. Failure to so transfer the interest within the nine (9) month period shall constitute a breach of this Agreement.
18.5. Transfer Fee
Franchisee must pay Subfranchisor a transfer fee, which will vary depending on whether the Transfer is a Major Transfer or a Minor Transfer. If the Transfer is a Major Transfer, the transfer fee is an amount equal to 10% of the then current Initial Fee (not to exceed 25% of the Initial Franchise fee paid) on the date of the Transfer. If the Transfer is a Minor Transfer, the transfer fee is an amount equal to $500.00. The transfer fee is nonrefundable even if, for any reason, the proposed Transfer does not occur. For purposes of this section, the following definitions apply:
(A) Major Transfer. The Transfer of a 50% or more interest in this Agreement or 50% or more interest in the equity or voting rights in the entity that owns or controls this Agreement, whether in one or more transfers.
(B) Minor Transfer. Transfer of less than a 50% interest in this Agreement, or less than 50% interest in the
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a Major Transfer involves transferring a significant portion of the franchise ownership, which triggers a higher transfer fee. Specifically, a Major Transfer occurs when there is a transfer of 50% or more interest in the Franchise Agreement itself. Alternatively, it also includes the transfer of 50% or more interest in the equity or voting rights within the entity that owns or controls the Franchise Agreement. This can happen through a single transfer or multiple transfers that cumulatively reach or exceed the 50% threshold.
In practical terms, if a franchisee intends to sell or transfer a controlling stake in their Exit franchise, they will likely be subject to the Major Transfer fee. This fee is calculated as 10% of the then-current Initial Fee, but it will not exceed 25% of the initial franchise fee originally paid. This means that the transfer fee can vary depending on the initial fee at the time of transfer, but it is capped to ensure it doesn't become excessively high.
Conversely, a transfer of less than 50% interest in the agreement or the equity/voting rights is considered a Minor Transfer, which incurs a lower transfer fee of $500. It's important for prospective Exit franchisees to understand these distinctions, as they can significantly impact the costs associated with transferring their franchise in the future. Also, no transfer fee is payable if an individual franchisee assigns its interest to a legal entity in accordance with Section 14.2 of the Franchise Agreement.