What happens to the Exit franchise agreement if the franchisee dies or becomes permanently disabled?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
heir 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.
18.4. Death or Permanent Disability
Upon the death or permanent disability of Franchisee, if an individual, or of a guarantor of this Agreement, this Agreement, or guarantor's interest in the entity that owns or controls this Agreement, may be transferred or bequeathed by Franchisee or guarantor or his or her estate to any designated person or beneficiary approved by Subfranchisor. However, the transfer to the designee or beneficiary will be subject to the applicable provisions of Section 18.3 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 equity or voting rights in the entity that owns or controls this Agreement or if the transfer is to an entity that has the same equity ownership as the transferor.
No transfer fee shall be payable by Franchisee to Subfranchisor, if an individual Franchisee assigns its interest to a legal entity in accordance with Section 14.2 of this Agreement.
18.6. Effect of Transfer
In the event of any Transfer, the entire unpaid principal balance of all amounts due EXIT, Subfranchisor, or the Brokers' Council, together with all accrued and unpaid interest thereon at the time of Transfer, or other conveyance, shall become immediately due and payable in full without further notice or demand by EXIT, Subfranchisor, or the Brokers' Council.
19. THE EXIT FORMULA
See Schedule 2 attached to and incorporated in this Agreement.
**20.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, in the event of the death or permanent disability of a franchisee, or a guarantor of the agreement, the agreement or the guarantor's interest in the entity that owns or controls the agreement may be transferred or bequeathed to a designated person or beneficiary approved by the subfranchisor. This transfer is subject to the provisions outlined in Section 18.3 of the agreement.
The disposition of the Exit franchise must be completed within a reasonable timeframe, specifically within nine months from the date of death or permanent disability. Failure to transfer the interest within this nine-month period constitutes a breach of the franchise agreement.
Exit defines "Permanent Disability or Permanently Disabled" as a mental or physical disability that prevents the individual from performing the material and substantial duties of their employment, as reasonably determined by the subfranchisor. While payment of benefits under a disability insurance policy is conclusive evidence of permanent disability, such payments are not required to establish permanent disability for the purposes of the agreement. This provides some flexibility in determining disability based on the subfranchisor's assessment.