According to the Floyds 99 development agreement, what constitutes a 'transfer'?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer acknowledges that Franchisor's right to approve or disapprove of a proposed sale or transfer, and all other requirements and rights related to such proposed sale or transfer, as provided for above, shall apply (1) if Developer is a partnership or other business association, to the addition or deletion of a partner or members of the association or the transfer of any partnership or membership among existing partners or members; (2) if Developer is a corporation or limited liability company, to any proposed transfer or assignment of 25% or more of the ownership interests of Developer, whether such transfer occurs in a single transaction or several transactions; and (3) if Developer is an individual, to the transfer from such individual or individuals to a corporation or limited liability company controlled by them, in which case Franchisor's approval will be conditioned upon: (i) the continuing personal guarantee of the individual (or individuals) for the performance of obligations under this Agreement; (ii) the issuance and/or transfer of ownership interests which would affect a change in ownership of 25% or more of the stock or membership units in the company being conditioned on Franchisor's prior written approval; (iii) a limitation on the company's business activity to that of operating
as a Developer and operator of the FLOYD'S 99 Shops developed pursuant to this Agreement and related activities; and (iv) other reasonable conditions. With respect to a proposed transfer as described in subsection (1) and (3) of this Section, Franchisor's right of first refusal to purchase, as set forth above, shall not apply and Franchisor will waive any transfer fee chargeable to Developer for a transfer under these circumstances.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, a transfer occurs under specific conditions depending on the developer's business structure. If the developer is a partnership or business association, adding or removing a partner or member, or transferring partnership or membership among existing partners, constitutes a transfer. For corporations or LLCs, a transfer includes any proposed transfer or assignment of 25% or more of the ownership interests, whether in a single transaction or multiple transactions. If the developer is an individual, transferring ownership to a corporation or LLC they control also constitutes a transfer.
Floyds 99 requires its approval for these transfers, especially when an individual transfers to a corporation or LLC. This approval is conditional upon the individual's continuing personal guarantee for obligations under the agreement. Additionally, the issuance or transfer of ownership interests affecting a 25% or greater change in the company's stock or membership units requires Floyds 99's prior written approval. The company's business activity must also be limited to operating as a Floyds 99 developer and related activities.
It is important to note that Floyds 99 waives the right of first refusal and any transfer fee for transfers involving partnerships/associations or transfers from an individual to a controlled entity. This waiver provides some flexibility for developers in these specific scenarios. However, all other types of transfers are subject to Floyds 99's standard approval processes and potential fees, as outlined in the franchise agreement.