Is the Exit Subfranchisor allowed to unreasonably withhold consent for a proposed transfer?

According to Exit's 2025 Franchise Disclosure Document, the Subfranchisor's consent to a proposed transfer cannot be unreasonably withheld. Specifically, Section 32 states that whenever the agreement requires consent or approval from either party, it shall not be unreasonably withheld. The agreement also states that responses to requests of approval should be given within a reasonable time period.

This provision protects the franchisee from arbitrary denials of transfer requests. However, the Subfranchisor can still deny a transfer if the franchisee or potential transferee does not meet certain conditions. These conditions include curing all defaults, paying all monies due to Exit, the Subfranchisor, and Brokers' Council, and providing financial statements and other documents sufficient for the Subfranchisor to approve the transferee's character, integrity, creditworthiness, business experience, and ethical background.

This "reasonable consent" clause is a fairly standard inclusion in franchise agreements, intended to balance the franchisor's need to control brand standards with the franchisee's right to eventually exit the business. Prospective Exit franchisees should carefully review all conditions related to transfer to fully understand the requirements and potential obstacles.