If a Flowerama franchise is transferred, is the non-competition radius subject to redetermination?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
To protect the System, the Marks, the Trade Practices, the Flowerama trade secrets and the goodwill associated with the same, the Franchise Agreement shall not be assigned, either voluntarily or by operation of law, without Franchisors prior written consent. Such consent shall not be unreasonably withheld. Franchisor's failure to consent to a proposed assignee who does not have a good credit history, a net worth adequate for the operation of the Franchised Unit, in Franchisor's reasonable judgment, who is a direct or indirect competitor of Franchisor or its affiliates, who does not have sufficient business acumen to properly operate a Franchised Unit or who does not satisfy all of Franchisor's requirements with respect to applicants for new franchisees, including fulfillment of the training requirement, execution and delivery of the current forms of Franchise Agreement then in use by Franchisor (providing for the payment of continuing franchise fees and marketing fees at the then-current rate for new franchisees and the redetermination of the non-competition radius of the Franchised Unit, if any, according to our then current criteria for new franchisees), shall be per-se reasonable.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 72–77)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, the non-competition radius of a franchised unit may be subject to redetermination upon transfer of the franchise. Specifically, if a proposed assignee of the franchise agreement does not meet Flowerama's requirements for new franchisees, which includes executing the current form of the franchise agreement, then the non-competition radius of the franchised unit may be redetermined according to Flowerama's current criteria for new franchisees. This is considered a reasonable condition for the transfer.
This means that if you are looking to sell your Flowerama franchise, the person or entity you are selling to must meet the standards Flowerama has in place for new franchisees. One of those standards is agreeing to the non-compete radius that Flowerama is currently enforcing for new franchisees. This could be different from the non-compete you originally agreed to when you purchased your franchise.
For a prospective franchisee, this clause highlights the importance of understanding the current non-competition terms and how they might change if you decide to sell the franchise in the future. It also emphasizes that the transfer of a Flowerama franchise is not guaranteed and is subject to Flowerama's approval based on specific criteria.