What fee must a Management Recruiters franchisee pay to the Franchisor for a transfer of the franchise?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall pay Franchisor a transfer fee of Five Thousand Dollars ($5,000.00), which is deemed to be reasonably required to cover Franchisor's expenses relating to such transfer.
13.6.3.
Covenants Not to Compete Unaffected.
No sale, assignment, transfer, conveyance, encumbrance, or gift of any interest in this Agreement, or in the Franchise Business, shall relieve Franchisee, and as applicable, its Principals, shareholders, or partners participating in any transfer, of the obligations of the covenants not to compete contained in Section 17 of this Agreement.
- **13.7.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to the 2024 FDD, a Management Recruiters franchisee must pay a transfer fee of $5,000 to the Franchisor in the event of any transfer of the franchise. This fee is intended to cover the Franchisor's expenses related to the transfer process. The franchisee must pay this fee at the time of the transfer.
However, there is an exception to this rule. If the transfer is to a Family Member of the franchisee, the transfer fee will be waived. This could be a significant benefit for franchisees looking to pass their business on to a family member without incurring additional costs.
In addition to the transfer fee, the proposed assignee must meet certain conditions to be approved. They must expressly assume all of the franchisee's obligations in writing, complete the training program to Management Recruiters' satisfaction, and have satisfied all financial and other obligations to Management Recruiters. The proposed assignee must also execute Management Recruiters' standard form Franchise Agreement, although they will not be required to pay an initial franchise fee. These conditions ensure that the new franchisee is well-prepared and committed to maintaining the standards of the Management Recruiters brand.
If the franchisee is entering into the agreement as the result of a transfer, they will pay a Jump Start Fee to cover the costs of training and other onboarding expenses, instead of the Initial Franchise Fee.