What happens to the Exit Realty Upper Midwest franchise if the franchisee dies?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| p. Your death or disability | 16 | Treated as a non-curable breach. See Section 18.4 for transferability provisions. | | l. | EXIT Realty Upper Midwest's approval of transfer by Franchisee | 18 | EXIT Realty Upper Midwest has the right to approve all transfers but will not unreasonably withhold approval. | |----|-----------------------------------------------------------------------------------|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | m. | Conditions for EXIT Realty Upper Midwest approval of transfer | 18 | New Franchisee qualifies, transfer fee (10% of the then current initial franchise fee, not to exceed 25% of the Initial Franchise fee paid) paid, purchase agreement approved, training arranged, Assignment signed and current Franchise Agreement signed by new Franchisor or Franchisee (also see the non-competition section below). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 27–31)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the death of an Exit Realty Upper Midwest franchisee is treated as a non-curable breach of the franchise agreement. This means that the franchisee's death automatically triggers certain consequences under the agreement, as Exit does not allow an opportunity to remedy the situation. However, the FDD specifies that Section 18.4 contains transferability provisions that may apply in the event of death.
Section 18.4, which is not included in the provided excerpts, likely outlines the specific procedures and conditions under which the franchise can be transferred to another party, such as the franchisee's heirs or a designated successor. These provisions would typically address issues like obtaining Exit's approval for the transfer, ensuring the new franchisee meets Exit's qualifications, and paying any applicable transfer fees. The standard transfer fee is 10% of the then-current initial franchise fee, but it cannot exceed 25% of the initial franchise fee originally paid.
Prospective Exit franchisees should carefully review Section 18.4 of the franchise agreement to understand their rights and obligations in the event of death or disability. It is important to clarify the conditions for transferring the franchise, any associated costs, and the process for obtaining Exit's approval. Understanding these provisions can help franchisees plan for the future and ensure a smooth transition of the business in unforeseen circumstances. Franchisees should also consult with legal and financial advisors to determine how these provisions align with their estate planning goals.