Must the buyer meet the qualifications for new franchisees before Mr. Sandless approves a transfer?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- 21.3.10 If the buyer is a corporation or limited liability company, the corporation's or limited liability company's satisfaction of our requirements for such entities as set forth in Section 21 (except Section 21.6) below.
In addition, we must approve all shareholders of a corporation transferee, or all members and managers of a limited liability company transferee.
We may require that a particular individual remain the owner of at least fifty-one percent (51%) of the outstanding stock of a franchisee corporation, or retain an interest of at least fifty-one percent (51%) in the limited liability company, as applicable, and serve as the corporation's chief executive officer or the limited liability company's manager;
21.3.11 The buyer must obtain, within the time limits set by us, and maintain thereafter, all permits and licenses required for the operation of the Business;
21.3.12 The transfer must be made in compliance with any laws that apply to the transfer, including state and federal laws governing the offer and sale of franchises;
21.3.13 The purchase price and terms of the proposed transfer are not so burdensome to the buyer as to impair or materially threaten its future operation of the Business and performance under its franchise agreement;
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, if a franchisee wishes to transfer their franchise, the buyer must meet certain qualifications. Specifically, if the buyer is a corporation or limited liability company, they must meet Mr. Sandless's requirements for such entities, as detailed in Section 21 of the franchise agreement, excluding Section 21.6. Mr. Sandless must also approve all shareholders of a corporation transferee, or all members and managers of a limited liability company transferee.
Mr. Sandless may also stipulate that a particular individual retain at least 51% ownership of the corporation's outstanding stock or a 51% interest in the limited liability company. This individual may also be required to serve as the corporation's chief executive officer or the limited liability company's manager. The buyer is also obligated to obtain and maintain all necessary permits and licenses required for operating the Mr. Sandless business.
The transfer must comply with all applicable laws, including state and federal laws governing franchise transfers. Additionally, the purchase price and terms of the proposed transfer must not be so burdensome that they impair the buyer's ability to operate the business and fulfill the franchise agreement. These stipulations ensure that the new owner is qualified and capable of maintaining the standards and obligations of a Mr. Sandless franchise.
These transfer requirements are typical in franchising, as franchisors want to ensure that any new franchisee is well-qualified and capable of running the business successfully to protect the brand and the interests of other franchisees. A prospective franchisee should carefully review Section 21 of the Mr. Sandless franchise agreement to fully understand all the requirements for a transfer.