Are there any exceptions to the transfer restrictions outlined in the Floyds 99 development agreement?
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, there are specific exceptions to the transfer restrictions outlined in the development agreement. The standard approval process for a sale or transfer does not apply in certain situations.
Specifically, if the developer is a partnership or business association, the addition or deletion of a partner or the transfer of partnership interests among existing partners is exempt from the right of first refusal and transfer fees. Similarly, if the developer is an individual, a transfer to a corporation or LLC controlled by that individual is also exempt from the right of first refusal and transfer fees. However, this exception is conditional. The individual must continue to personally guarantee the obligations, any change of ownership of 25% or more in the company requires prior written approval from Floyds 99, the company's business must be limited to operating Floyds 99 shops, and other reasonable conditions may apply.
These exceptions provide some flexibility for developers in structuring their business and managing ownership changes without automatically triggering the franchisor's right of first refusal or incurring transfer fees, provided certain conditions are met to protect Floyds 99's interests and ensure continued performance under the development agreement.