Can the Exit Subfranchisor unilaterally transfer the Franchise Agreement without the Franchisee's approval?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
18.1. Transfer by Subfranchisor
This Agreement may be unilaterally transferred by Subfranchisor without the approval or consent of Franchisee with the consent of Franchisor. Any such transfer shall inure to the benefit of the transferee and Subfranchisor's interest in this Agreement shall automatically terminate on the date of the transfer.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Subfranchisor can unilaterally transfer the Franchise Agreement without the Franchisee's approval or consent, provided the Franchisor consents to the transfer. Upon such a transfer, the Subfranchisor's interest in the agreement automatically terminates on the transfer date, and the transfer benefits the new transferee.
This clause means that an Exit franchisee could find their agreement transferred to a new subfranchisor without their direct consent. While the franchisee's consent isn't required, the Franchisor's consent is necessary for the transfer to proceed. This condition provides a layer of protection for the franchisee, as the Franchisor has an interest in ensuring the new subfranchisor is capable and suitable.
It is important for a prospective Exit franchisee to understand the implications of this clause. While the Franchisor's consent is required, the franchisee has no direct control over the transfer decision. This could lead to changes in the support, resources, or overall relationship with the subfranchisor. Therefore, a franchisee should carefully consider the potential impact of such a transfer and discuss any concerns with the franchisor before signing the agreement.