What constitutes 'good cause' for Expense Reduction Analysts to terminate a franchise agreement?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (REGIONAL FRANCHISEES) (FDD pages 52–57)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, the definition of 'good cause' for refusing a franchise transfer is outlined specifically in the addendum for the state of Michigan. It is important to note that this definition applies specifically to transfer of ownership, not general termination of the franchise agreement.
'Good cause' includes several factors related to the proposed transferee. These are:
- The proposed transferee fails to meet Expense Reduction Analysts' current qualifications or standards.
- The proposed transferee is a competitor of Expense Reduction Analysts or its subfranchisors.
- The proposed transferee is unwilling to agree in writing to comply with all lawful obligations.
- Either the franchisee or the proposed transferee has outstanding payments due to Expense Reduction Analysts or has failed to correct any existing defaults in the Franchise Agreement at the time of the proposed transfer.
This definition provides clarity for franchisees in Michigan regarding what constitutes an acceptable transfer, but it does not define 'good cause' for general termination of the franchise agreement. Prospective franchisees should consult the franchise agreement and seek legal counsel to fully understand the conditions under which Expense Reduction Analysts can terminate the agreement.