In Michigan, what constitutes 'good cause' for Monicals Pizza to refuse a transfer of ownership of a franchise?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- A provision that permits a Franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
The subdivision does not prevent a Franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
The failure of the proposed transferee to meet the Franchisor's then-current reasonable qualifications or standards.
The fact that the proposed transferee is a competitor of the Franchisor or Subfranchisor.
The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
The failure of the Franchisee or proposed transferee to pay any sums owing to the Franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, in Michigan, Monicals Pizza can refuse a transfer of franchise ownership for 'good cause.'
'Good cause' includes, but isn't limited to, situations where the proposed transferee doesn't meet Monicals Pizza's current qualifications or standards. It also applies if the transferee is a competitor of Monicals Pizza. Refusal is also warranted if the transferee is unwilling to comply with all lawful obligations in writing or if either the franchisee or transferee hasn't paid sums owed to Monicals Pizza or hasn't fixed a default in the Franchise Agreement at the time of the proposed transfer.
This means that Monicals Pizza retains significant control over who can become a franchisee through a transfer. A prospective buyer must meet the brand's standards and not pose a competitive threat. Franchisees looking to sell must ensure all their financial obligations are met and any defaults are resolved to facilitate the transfer.