For a Floyds 99 franchise in Washington, to what extent are transfer fees collectable?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO THE FLOYD'S 99 FRANCHISING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR THE STATE OF WASHINGTON
To the extent the Washington Franchise Investment Protection Act, Wash. Rev. Code §§19.100.010 – 19.100.940 applies, the terms of this Addendum apply.
Franchisees who receive financial incentives to refer franchise prospects to Franchisors may be required to register as franchise brokers under the laws of Washington State. 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, the terms of the addendum apply to the extent that the Washington Franchise Investment Protection Act, Wash. Rev. Code §§19.100.010 – 19.100.940, applies. This suggests that Washington State law may impact the collectability of transfer fees.
Specifically, if a Developer is an individual and transfers to a corporation or limited liability company controlled by them, Floyds 99's approval is needed. This approval is conditional upon the individual's continuing personal guarantee, restrictions on ownership interest changes of 25% or more, limiting the company's business activity to operating Floyds 99 Shops, and other reasonable conditions.
However, the FDD states that Floyds 99 will waive any transfer fee chargeable to the Developer under these specific circumstances. This waiver of transfer fees applies only to transfers from an individual to a controlled corporation or LLC, or in cases of adding/deleting a partner or member in a partnership or business association. For other types of transfers, the standard transfer fee policies outlined in the Franchise Agreement would likely apply, subject to the stipulations of Washington law.