Under what conditions can Floors To Go refuse a transfer of ownership of a franchise?
Floors_To_Go 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 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, Floors To Go can refuse a transfer of ownership of a franchise for good cause. This does not prevent Floors To Go from exercising a right of first refusal to purchase the franchise itself. Good cause includes specific conditions related to the proposed transferee's qualifications, relationship to Floors To Go, and willingness to comply with obligations, as well as the franchisee's financial standing.
Specifically, Floors To Go may refuse a transfer if the proposed transferee does not meet the franchisor's current reasonable qualifications or standards. This ensures that any new franchisee meets the brand's expectations for competence and operational ability. Floors To Go can also refuse a transfer if the proposed transferee is a competitor, protecting the brand from potential conflicts of interest or misappropriation of trade secrets.
Furthermore, Floors To Go can deny a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the franchise agreement. Finally, Floors To Go can refuse a transfer if the franchisee or proposed transferee has not paid all sums owing to Floors To Go or has failed to cure any default in the franchise agreement at the time of the proposed transfer, addressing outstanding financial or contractual issues.