Is a Ledgers franchisee required to pay a transfer fee to transfer their interest?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
rst Refusal. At the time of the desired transfer of interest to a Controlled Entity, you must notify us in writing of the name of the Controlled Entity and the name and address of each officer, director, shareholder, member, partner, or similar person and their respective ownership interest. Each such person of the Controlled Entity must sign the then-current amendment and release forms or Franchisee Agreement as required by us. We do not charge a transfer fee for this change.
7.5. Transfer within an Entity
A transfer of interest within a Franchisee entity will not trigger the Right of First Refusal if only the percentage ownership changes rather than the identity of the owners. At the time of the desired transfer of interest within an entity, you must notify us in writing of the name and address of each officer, director, shareholder, member, partner or similar person and their respective ownership interest. Each such person of the Controlled Entity will sign the then-current amendment and release forms or Franchisee Agreement as required by us. We do not charge a transfer fee for this change.
7.6. Right of First Refusal
We do not reserve a right to first refusal.
7.7. Death or Incapacity
A. Definition
The term "incapacity" means a condition that prevents you from reasonably carrying out your duties under this Agreement for thirty (30) consecutive days.
B. Transfer
We may terminate this Agreement unless, within sixty (60) days of your death or incapacity, your executor, personal representative or guardian:
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- seeks a transfer of your rights under this Agreement;
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- completes the transfer within six (6) months of your death or incapacity;
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- pays all monies owed to us, including the transfer fee, and
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- signs the then-current transfer and release form
C. New Franchisee
The Transferee(s) must:
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- meet the requirements of Section 7.8 entitled Transferee Requirements.
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- complete Initial Training, and
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- enter into a new Franchise Agreement on the then-current form.
D. Interim Services
An interim operator must meet the Transferee Requirements as defined in Section 7.8 except such interim operator may not enter into a new Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, a franchisee may be required to pay a transfer fee of $5,000 when transferring ownership of their franchise. Specifically, this fee applies when transferring rights under the Franchise Agreement or a majority of ownership in the agreement or in an entity holding the agreement.
However, there are exceptions where a transfer fee is not charged. A transfer of interest within a franchisee's entity that only changes the percentage of ownership, rather than the identity of the owners, does not incur a transfer fee. Similarly, transferring interest to a Controlled Entity, defined as an entity where the franchisee is the beneficial owner of 100% of each class of voting ownership interest, also does not trigger a transfer fee.
In the event of the franchisee's death or incapacity, the executor, personal representative, or guardian must seek a transfer of rights within 60 days and complete the transfer within six months. As part of this process, they must pay all monies owed, including the transfer fee, and sign the current transfer and release form. The transferee must also meet specific requirements, complete initial training, and enter into a new Franchise Agreement on the then-current form.
Prospective Ledgers franchisees should carefully consider these transfer conditions and associated fees, as they can significantly impact the financial implications of selling or transferring the franchise under various circumstances. Understanding these requirements is crucial for long-term planning and decision-making related to the franchise.