What is the Management Recruiters franchisee required to do if they desire to sell or transfer the franchise business?

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securities of Franchisee or otherwise losing the right to control the affairs of Franchisee, shall be deemed to be an assignment of this Agreement within the meaning of this Section 13. If Franchisee is at any time a partnership, then the death, voluntary or involuntary or other withdrawal of any general partner, admission of any additional general partner, or transfer of any general partner's interest in the property, management, or profits and/or losses of the partnership shall be deemed to be an assignment within the meaning of this Section 13.

• 13.5. Franchisor's Right of First Refusal. If Franchisee desires to sell or otherwise transfer the Franchise Business and assign this Agreement, Franchisee shall deliver to Franchisor written notice setting forth all the terms of the proposed transfer and assignment and all information that Franchisor requests concerning the proposed assignee. Franchisor shall have the option, during the thirty (30) days after receipt of the notice, to purchase the Franchise Business and accept assignment of this Agreement on the terms contained in the notice, provided that Franchisor shall have the right to substitute the cash equivalent of any non-cash consideration described in such notice. If Franchisor exercises this option, the purchase of the Franchise Business by Franchisor must be completed no later than thirty (30) days after Franchisor's notice to Franchisee of its purchase election. If Franchisor does not exercise this option during such thirty (30) day period then Franchisee may, during the following one hundred twenty (120) days, transfer the Franchise Business and assign this Agreement to the proposed assignee on the terms in the notice, provided that the assignment shall be made, without limitation, in compliance with this Section. Any proposed transfer not completed within such one hundred twenty (120) day period or any material change in the terms of the proposed transaction prior to closing shall constitute a new offer to which Franchisor shall have the right of first refusal and shall require compliance with this Section 13.5.
• 13.6. Further Conditions. If Franchisor elects not to exercise its right of first refusal, Franchisor's approval of a proposed transfer shall not be unreasonably withheld. However, without limitation of the foregoing, imposition of any or all of the following conditions precedent to Franchisor's approval shall be deemed to be reasonable:
  • 13.6.1. Transfer to Franchisee's Corporation.If Franchisee is an individual or partnership and desires to assign and transfer his rights to a newly organized corporation or limited liability company solely for the convenience of ownership:

• such entity's charter shall provide that its activities are confined exclusively to operating the Franchise Business as set forth in this Agreement;
• Franchisee shall be, and shall remain, the owner of the majority stock interest in the transferee corporation or limited liability company;
• the individual Franchisee (or if the Franchisee is a partnership, one of the general partners) shall be, and shall remain, the principal executive officer of the entity;
• the transferee entity shall enter into a written assignment with Franchisee and Franchisor, in form satisfactory to Franchisor, assuming all of the Franchisee's obligations under this Agreement; provided, however, that the Franchisee shall guarantee and shall remain ultimately responsible for all of Franchisee's obligations under this Agreement;
• each stock certificate of the transferee entity shall have conspicuously endorsed upon it a statement that it is held subject to, and that further assignment or transfer thereof is subject to, all restrictions imposed upon assignments and transfers by this Agreement;
• no new shares of common or preferred voting stock in the transferee entity shall be issued to any person, partnership, trust, foundation, or corporation without obtaining Franchisor's prior written consent; and
• all accrued money obligations of Franchisee to Franchisor, its Affiliates or assignees, shall be satisfied prior to assignment or transfer.
• 13.6.2. Other Transfers.

Source: Item 23 — RECEIPTS (FDD pages 67–327)