What constitutes 'good cause' for Mr. Sandless to refuse a transfer of ownership?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This 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:
(i) Failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) 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 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 30–34)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, Mr. Sandless can refuse a transfer of ownership for 'good cause.' This includes several specific scenarios.
First, Mr. Sandless can refuse a transfer if the proposed transferee does not meet the then-current reasonable qualifications or standards that Mr. Sandless has in place. This means that the person or entity to whom a franchisee wants to transfer the business must meet the criteria Mr. Sandless sets for new franchisees at that time.
Second, Mr. Sandless can block a transfer if the proposed transferee is a competitor of Mr. Sandless or its subfranchisor. This is a standard provision to protect the brand and prevent sensitive business information from falling into the hands of rivals. Third, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, Mr. Sandless can refuse the transfer. This ensures that the new owner is legally bound to the franchise agreement. Finally, Mr. Sandless can refuse a transfer if the franchisee or the proposed transferee has failed to pay any sums owing to Mr. Sandless or has not cured any default in the franchise agreement at the time of the proposed transfer. This protects Mr. Sandless's financial interests and ensures compliance with the franchise agreement.