What is the effect of Subsections 12.B and C on the sale of a Focalpoint Coaching franchise?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may review all information regarding the Franchised Business that Franchisee gives the transferee, correct any information that Franchisor believes is inaccurate, and give the transferee copies of any reports that Franchisee has given Franchisor or Franchisor has made regarding the Franchised Business.
D. TRANSFER TO A WHOLLY-OWNED CORPORATION OR LIMITED LIABILITY COMPANY.
Despite Subsection 12.C above, if Franchisee is fully complying with this Agreement, Franchisee may transfer this Agreement to a corporation or limited liability company which conducts no business other than the Franchised Business and, if applicable, other FocalPoint Franchised Businesses, in which Franchisee maintains management control, and of which Franchisee owns and controls one hundred percent (100%) of the equity and voting power of all issued and outstanding ownership interests, provided that all of the Franchised Business' assets are owned, and the Franchised Business' business is conducted, only by that single corporation or limited liability company. The corporation or limited liability company must expressly assume all of Franchisee's obligations under this Agreement. Transfers of ownership interests in the corporation or limited liability company are subject to the conditions of Subsection 12.C above that otherwise apply to non-controlling transfers. Franchisee agrees to remain personally liable under this Agreement as if the transfer to the corporation or limited liability company did not occur.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
The 2025 Focalpoint Coaching Franchise Disclosure Document (FDD) outlines specific conditions and limitations regarding the transfer of a franchise, as detailed in subsection 12.C. Generally, a Focalpoint Coaching franchisee needs franchisor approval to transfer the franchise. The franchisor may review all information regarding the franchised business that the franchisee provides to the potential transferee, correct any information the franchisor believes is inaccurate, and provide the transferee with copies of any reports the franchisee has given the franchisor or that the franchisor has created about the franchised business.
However, subsection 12.D provides an exception to these transfer rules. A Focalpoint Coaching franchisee who is fully compliant with the Franchise Agreement can transfer the agreement to a corporation or limited liability company. This corporation or LLC must exist solely to conduct the franchised business (and potentially other Focalpoint Coaching franchises owned by the franchisee). The franchisee must maintain management control and own 100% of the equity and voting power in the company. The corporation or LLC must also expressly assume all of the franchisee's obligations under the Franchise Agreement. Even with this transfer, the franchisee remains personally liable under the agreement.
In summary, while subsection 12.C generally restricts franchise transfers without franchisor approval, subsection 12.D allows a compliant Focalpoint Coaching franchisee to transfer the franchise to a wholly-owned corporation or LLC under specific conditions, while retaining personal liability. This provides some flexibility for franchisees in structuring their business operations while ensuring Focalpoint Coaching maintains control over franchise ownership and operations.