Is the transfer of a Floyds 99 development agreement dependent on the transferee's agreement to operate the business?
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, the transfer of a development agreement to a corporation or limited liability company controlled by an individual is contingent upon several conditions. One of these conditions is that the company's business activity is limited to operating as a developer and operator of Floyds 99 shops developed under the agreement and related activities. This means that the transferee must agree to operate the Floyds 99 business.
Additionally, the franchisor's approval is conditional upon the continuing personal guarantee of the individual for obligations under the agreement and limitations on changes in ownership of the company. Specifically, any transfer affecting a 25% or greater change in ownership requires the franchisor's prior written approval.
These stipulations ensure that the individual behind the corporation or LLC remains committed to the business and that Floyds 99 maintains control over significant ownership changes. This is a fairly standard practice in franchising, as franchisors want to ensure that new operators are qualified and committed to upholding brand standards. Floyds 99 also retains the right to impose other reasonable conditions on the transfer.