Under what conditions are certain transfers of interest in a Learningrx franchise permitted?

pproved by Franchisor or be effective unless and until:

• (a) Franchisee is under no material default in the performance or observance of any of its obligations under this Agreement and Franchisee is under no material default that materially impairs or detracts from the goodwill or brand under any other agreement with Franchisor at the time Franchisee requests permission to transfer the Business or at the time of the transfer;

• (b) Franchisee has settled all outstanding accounts with Franchisor, and Franchisee, and every principal of Franchisee's entity, have executed a general release of Franchisor and all principals of Franchisor from all claims that may be brought by you or any principal;
• (c) the proposed transferee pays Franchisor a fee to transfer the Business ("Transfer Fee") in the amount of Ten Thousand and 00/100 Dollars ($10,000.00), unless the transferee is: (i) a corporation, partnership, or limited liability company of which Franchisee is the majority stockholder, or a child, parent, sibling or spouse of Franchisee, in which case no Transfer Fee will be required, or (ii) another franchisee of LearningRx, in which case the Transfer Fee will be Five Thousand and 00/100 Dollars ($5,000.00). The Transfer Fee is fully earned upon payment and is non-refundable under any circumstances;
• (d) the proposed transferee executes a separate franchise agreement with Franchisor, using the then-current form of franchise agreement;
• (e) the proposed transferee pays for, attends, and satisfactorily completes the training program for new franchisees unless the transferee is a current franchisee or administrative staff member in good standing in the System that has already attended a full franchise training and met the current training requirements for a Center's staff;
• (f) the proposed transferee pays an Initial Training and Materials Fee of Ten Thousand and 00/100 Dollars ($10,000.00) upon the signing of the separate franchise agreement with Franchisor, unless the transferee is another franchisee of LearningRx, in which case the Initial Training and Materials Fee will be Six Thousand and 00/100 Dollars ($6,000.00). The Initial Training and Materials Fee is fully earned upon payment and is non-refundable under any circumstances;
• (g) the individual proposed transferee, or the stockholders, partners, members, or trustees and beneficiaries of a proposed entity transferee, each execute a personal guarantee, jointly and severally guaranteeing the performance of the proposed transferee's obligations;
• (h) the proposed transferee demonstrates to Franchisor's satisfaction that it, in all respects, meets Franchisor's standards applicable to new franchisees regarding experience, personal and financial reputation and stability, willingness and ability to devote his or her full time and best efforts to the operation of the franchised Business, and any other conditions as Franchisor may reasonably apply in evaluating new franchisees. Franchisor must be provided all information about the proposed transferee as it may reasonably require. Because of the confidential information available to a franchisee, no assignment to a competitor of the System will be permitted, and;
• (i) in the event the proposed transfer is the result of the introduction from a third-party broker, Franchisee or the transferee will be solely responsible for payment of such brokerage commissions, and all such commissions must be paid in full before the transfer is deemed effective by Franchisor.
• (j) Anything to the contrary notwithstanding, if the proposed Transfer is (i) of a noncontrolling interest in Franchisee (and is not one of a series of Transfers which, in the aggregate with other Transfers, would constitute or result in the transfer of a controlling interest in Franchisee) and the Transfer is to one of Franchisee's owners listed in Attachment V, an immediate family member of one of Franchisee's owners listed in Attachment V; (ii) of a controlling interest in Franchisee and solely among Franchisee's owners listed in Attachment V; or (iii) of any interest in Franchisee and solely among entities that are controlled by Franchisee's Owners listed in Attachment V for estate planning purposes all of the following conditions must be met prior to or concurrently with the effective date of the proposed Transfer:
  • (xv) Franchisee is under no material default in the performance or observance of any of its obligations under this Agreement and Franchisee is under no material default that

materially impairs or detracts from the goodwill or brand under any other agreement with Franchisor at the time Franchisee requests permission to transfer the Business or at the time of the transfer;

Source: Item 23 — RECEIPT (FDD pages 54–209)