What constitutes unreasonable withholding of consent by Ifly regarding assignment?
Ifly Franchise · 2024 FDDAnswer from 2024 FDD Document
This Agreement shall not be assignable by Buyer without the express written consent of Seller, which consent shall not be unreasonably withheld or delayed, so long as the prospective assignee executes a then current iFLY franchise agreement containing substantially the same terms as the Franchise Agreement. Seller may withhold its consent, and in so doing will not be deemed to be acting unreasonably, if Seller in the exercise of its reasonable business judgment determines that the prospective assignee has insufficient business reputation or experience, or that the financial condition of the prospective assignee is inadequate to fulfill the obligations of the franchise agreement (notwithstanding that Buyer may remain liable). It is understood and agreed that the express written consent of Seller shall be required before assignment to an Affiliate of Buyer or a successor of Buyer of all or substantially all of the relevant (to this Agreement) assets of Buyer. In the event that this Section 6.3.1 is determined to be unenforceable, Buyer agrees to take such actions as Seller may require to protect Seller's interests, including, without limitation, offering Seller a right of first refusal to purchase the Equipment and/or prior to any sale to a third party, removing all trademarks and other indicia identifying the Equipment with Seller or its Affiliates.
Source: Item 23 — Receipts (FDD pages 57–174)
What This Means (2024 FDD)
According to Ifly's 2024 Franchise Disclosure Document, Ifly can withhold consent for a franchise assignment if the potential assignee doesn't meet certain criteria. However, Ifly's consent cannot be unreasonably withheld or delayed if the prospective assignee is willing to execute Ifly's current franchise agreement with substantially the same terms as the original agreement.
Ifly may reasonably withhold consent if, using reasonable business judgment, they determine the prospective assignee lacks sufficient business reputation or experience, or if the assignee's financial condition is inadequate to fulfill the franchise agreement obligations. This is the case even if the original franchisee remains liable for the agreement.
If the section regarding Ifly's consent is deemed unenforceable, the franchisee must take actions to protect Ifly's interests. These actions could include offering Ifly the right of first refusal to purchase the equipment or removing trademarks and other identifying marks associated with Ifly before selling to a third party. This ensures Ifly maintains control over its brand and standards, even in situations where the agreement's enforceability is questioned.