What must an Exit franchisee do to comply with the franchise agreement when transferring ownership?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
unauthorized Transfer, whether voluntary, involuntary, by operation of law or otherwise, or any attempt to do so, shall be deemed void and be grounds 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; and
- (C) Franchisee shall submit to Subfranchisor current, accurate financial statements and other documents sufficient to enable Subfranchisor to determine and approve (in its discretion) the character, integrity, creditworthiness, business experience, reasonable net worth, professional credentials and ethical background of the proposed transferee; and
- (D) Franchisee shall furnish Subfranchisor with copies of the transfer documents, in a form acceptable to Subfranchisor; and
- (E) Franchisee shall provide both the proposed transferee and Subfranchisor complete financial information on the subject franchise required by the transferee; and
- (F) Franchisee shall provide Subfranchisor, on the then current form prescribed by Subfranchisor or EXIT, a full general release and waiver in favor of Subfranchisor, EXIT and their affiliates; and
- (G) Franchisee shall pay the transfer fee required under Section 18.5;
- (H) The proposed transferee shall sign Subfranchisor's then current form of Guaranty of this Agreement; and
- (I) The proposed transferee shall complete, or agree to complete, the training required under Section 9.11.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee needs to meet several conditions to get the Subfranchisor's written consent for a transfer. The Subfranchisor will not unreasonably withhold consent to any proposed transfer, provided that the franchisee and/or the transferee comply with the outlined conditions.
These conditions include fully complying with all provisions of the Franchise Agreement, which means curing all defaults and noncompliance under the agreement and any other franchise agreements with Exit or the Subfranchisor. The franchisee must also pay all monies due to Exit, the Subfranchisor, and the Brokers' Council. Additionally, the franchisee must provide current and accurate financial statements and other documents about the proposed transferee, enabling the Subfranchisor to assess their character, integrity, creditworthiness, business experience, net worth, professional credentials, and ethical background.
Furthermore, the franchisee is required to furnish copies of the transfer documents in a form acceptable to the Subfranchisor and provide complete financial information on the franchise to both the proposed transferee and the Subfranchisor. A full general release and waiver in favor of the Subfranchisor, Exit, and their affiliates must be provided on the current form. The franchisee must also pay the transfer fee. The proposed transferee must sign the Subfranchisor's current form of Guaranty of the Agreement and complete, or agree to complete, the required training.
Failure to comply with these conditions or any unauthorized transfer can be grounds for termination of the Franchise Agreement by the Subfranchisor, emphasizing the importance of adhering to these requirements when considering a transfer of ownership.