For a Ledgers franchise in Washington, are transfer fees limited to the franchisor's reasonable costs?

According to Ledgers's 2025 Franchise Disclosure Document, transfer fees for franchises in Washington are limited to the franchisor's reasonable costs. Specifically, the Washington Addendum to the Franchise Disclosure Document and Franchise Agreement states that transfer fees are collectable only to the extent that they reflect Ledgers's reasonable estimated or actual costs in effecting a transfer. This provision is designed to protect franchisees from excessive or arbitrary transfer fees.

This means that if a Ledgers franchisee in Washington decides to sell their franchise, the transfer fee that Ledgers charges must be directly related to the expenses Ledgers incurs during the transfer process. These costs could include administrative expenses, legal fees, and the costs associated with training the new franchisee. Ledgers cannot charge a transfer fee that is simply a percentage of the sale price or an arbitrary amount unrelated to their actual costs.

For a prospective Ledgers franchisee in Washington, this is a beneficial provision. It provides some assurance that transfer fees will be fair and reasonable, rather than a potential source of profit for the franchisor. Franchisees should ensure they understand what costs Ledgers includes in its transfer fee calculation and should request a detailed breakdown of these costs if they decide to transfer their franchise. This requirement is imposed by the Washington Franchise Investment Protection Act.

It is important to note that while the transfer fee is limited to reasonable costs, other conditions may apply to the transfer of a Ledgers franchise, such as the transferee meeting certain qualifications and entering into a new franchise agreement. Franchisees should carefully review the franchise agreement and related documents to understand all the requirements and restrictions related to franchise transfers.