How does Exit Realty Upper Midwest define a 'transfer' of the franchise by the franchisee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| k. | "Transfer" by you – definition | 18 | | 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 Realty Upper Midwest's 2025 Franchise Disclosure Document, Item 17 addresses the conditions under which a franchisee can transfer their franchise. While the table in Item 17 acknowledges that there is a definition of 'transfer' within the franchise agreement, the document does not explicitly provide the definition of what constitutes a 'transfer' by the franchisee. Instead, it focuses on the conditions and requirements for Exit's approval of such a transfer.
To transfer an Exit franchise, the potential new franchisee must meet Exit's qualifications. Additionally, a transfer fee is required, which is calculated as 10% of the current initial franchise fee but will not exceed 25% of the initial franchise fee that the original franchisee paid. The purchase agreement between the franchisee and the new franchisee must be approved by Exit. Training arrangements for the new franchisee must be made, and an assignment agreement must be signed. Finally, the new franchisee or franchisor must sign the current Franchise Agreement.
Prospective franchisees should note that Exit Realty Upper Midwest has the right to approve all transfers, but they will not unreasonably withhold approval. It is important for potential franchisees to fully understand the conditions and procedures for transferring their franchise, as detailed in the franchise agreement. Since the specific definition of 'transfer' is not provided in this excerpt, it would be prudent for a prospective franchisee to seek clarification from Exit regarding what actions or events would be considered a 'transfer' requiring franchisor approval.