What actions are considered an 'Ownership Interest Transfer' for a Jersey Mikes franchise?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither Franchisee nor any Principal shall effectuate an Ownership Interest Transfer (defined in Section 31) before the Franchised Restaurant opens for business under any circumstances.
After the Franchised Restaurant opens for business, any Ownership Interest Transfer will be subject to Franchisor's prior written consent.
Franchisor may condition its consent on compliance with certain requirements, including, without limitation, any of the following (which Franchisee agrees are reasonable):
- a.
At the time of the Ownership Interest Transfer, Franchisee is in full compliance with its obligations under this Agreement, and all other agreements with Franchisor and its Affiliates, including payment of all monetary obligations due F ranchisor and its Affiliates.
- b.
Each principal of the proposed transferee meets Franchisor's criteria for qualifying as a new franchisee and delivers a signed Guaranty and Assumption of Obligations.
- c.
If the O wnership Interest Transfer involves Control of the Owne rship Interests in Franchisee, the transferees comply with Section 19.2 and all its subsections.
- d.
Franchisee and each of its Principals and Guarantors shall provide to F ranchisor an unconditional, general release of all claims it may have against Franchisor, its Affiliates, and their respective officers, directors, shareholders, partners and employees
- 19.5 Waiver of Interference Claims.
Franchisee acknowledges that Franchisor has legitimate reasons to evaluate the qualifications of potential transferees and to analyze and critique the terms of their purchase contracts with Franchisee.
Franchisee also acknowledges that Franchisor's contact with potential transferees for the purpose of protecting its business interests will not constitute improper or unlawful conduct.
Franchisee expressly authorizes Franchisor to investigate any potential transferee's qualifications, to analyze and critique the pr oposed purchase terms with the transferee, and to wit hhold consent to economically questionable transactions.
Franchisee and its Principals waive any and all claims that actions taken by Franchisor or its representatives in relation to a proposed Transfer to protect Franchisor's business interests constitute tortious interference with contractual or business relationships.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mikes' 2025 Franchise Disclosure Document, a franchisee cannot effectuate an Ownership Interest Transfer before their restaurant opens for business. After opening, any Ownership Interest Transfer is subject to Jersey Mike's prior written consent. Jersey Mikes may require compliance with certain conditions for approval.
These conditions include the franchisee being in full compliance with all obligations to Jersey Mikes and its affiliates at the time of the transfer, including all monetary obligations. Additionally, each principal of the proposed transferee must meet Jersey Mike's criteria for new franchisees and deliver a signed Guaranty and Assumption of Obligations.
If the Ownership Interest Transfer involves a change in control of the ownership interests in the franchisee, the transferees must comply with the requirements outlined in Section 19.2 of the franchise agreement, including all its subsections. Furthermore, the franchisee, its principals, and guarantors must provide Jersey Mikes with an unconditional, general release of all claims against Jersey Mikes, its affiliates, and their respective officers, directors, shareholders, partners, and employees. Jersey Mikes retains the right to evaluate potential transferees and analyze the terms of their purchase contracts, and contact with potential transferees to protect its business interests does not constitute improper conduct.