What constitutes 'good cause' for Hawaiian Bros Island Grill to refuse a franchise transfer?
Hawaiian_Bros_Island_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- g. A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- i. the failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards;
- ii. the fact that the proposed transferee is a competitor of the franchisor or subfranchisor;
- iii. the unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations; and
- iv. the failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 77–262)
What This Means (2025 FDD)
According to Hawaiian Bros Island Grill's 2025 Franchise Disclosure Document, 'good cause' for refusing a franchise transfer includes several specific scenarios. These include the proposed transferee's failure to meet the franchisor's current qualifications or standards, ensuring that new franchisees meet the brand's expectations for operational and financial success. Another cause is if the proposed transferee is a competitor of Hawaiian Bros Island Grill, preventing potential conflicts of interest and protecting proprietary information.
Additionally, Hawaiian Bros Island Grill can refuse a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, ensuring adherence to the franchise agreement and brand standards. Finally, failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer also constitutes good cause. This protects Hawaiian Bros Island Grill from financial losses and ensures compliance with contractual obligations.
These conditions are typical in franchising, as franchisors need to maintain brand standards, protect their systems, and ensure financial stability. A prospective Hawaiian Bros Island Grill franchisee should carefully consider these conditions, as they will impact their ability to sell or transfer their franchise in the future. Understanding these conditions is crucial for making an informed decision about investing in a Hawaiian Bros Island Grill franchise.