Under what circumstances can Flowerama withhold consent for a franchise transfer?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
- a. Restriction on Transfer by Franchisee. 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. No partial assignment of the Franchise Agreement shall be allowed.
- b. Corporation or Limited Liability Company as Proposed Assignee. If the proposed assignee is a corporation or limited liability company, Franchisor shall have the right, as a condition to granting our consent, to require responsible officers and members of the corporation or limited liability company to execute the current Franchise Agreement and to personally guarantee the performance of the corporation or limited liability company thereunder. Additionally, the performance of its obligations shall be guaranteed by all of its shareholders and members as from time to time constituted.
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 company's consent to a franchise transfer will not be unreasonably withheld. However, Flowerama lists specific conditions under which withholding consent is considered reasonable. These conditions relate to the proposed assignee's financial stability, competitive status, business acumen, and fulfillment of Flowerama's requirements for new franchisees.
Specifically, Flowerama can reasonably withhold consent if the proposed assignee does not have a good credit history or a net worth adequate for operating the franchised unit. Consent can also be withheld if the assignee is a direct or indirect competitor of Flowerama or its affiliates. Furthermore, if the assignee lacks sufficient business acumen to properly operate the franchised unit or fails to meet all of Flowerama's requirements for new franchisees, including training, executing the current franchise agreement, and agreeing to the then-current continuing franchise fees, marketing fees, and non-competition radius, Flowerama can reasonably withhold consent.
If the proposed assignee is a corporation or limited liability company, Flowerama has the right to require responsible officers and members to execute the current Franchise Agreement and personally guarantee the corporation or limited liability company's performance. Additionally, all shareholders and members must guarantee the performance of the obligations.