Does Exit Realty Upper Midwest have the right to approve all franchisee transfers?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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, Exit Realty Upper Midwest retains the right to approve all franchisee transfers. However, this approval will not be unreasonably withheld. This means that while Exit has the authority to vet and ultimately decide on any transfer of ownership, they must have justifiable reasons for denying a transfer.
Several conditions must be met for Exit Realty Upper Midwest to approve a transfer. The new franchisee must meet Exit's qualifications. A transfer fee is required, calculated as 10% of the current initial franchise fee, but it cannot exceed 25% of the initial franchise fee originally paid. A purchase agreement must be approved, and arrangements must be made for training the new franchisee. Finally, an assignment must be signed, and the new franchisee must sign the current Franchise Agreement.
These stipulations are fairly standard in franchising, as franchisors typically want to ensure that any new franchisee meets their standards and is properly trained to maintain brand consistency and operational effectiveness. The transfer fee compensates Exit for the administrative costs associated with the transfer and the potential impact on the franchise system. Prospective franchisees should carefully review these conditions and understand the costs and requirements involved in transferring their Exit franchise in the future.