What constitutes a prohibited transfer of rights under the Mr. Sandless franchise agreement?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
onmonetary obligations under this Agreement and any other agreement between you and us or our affiliates;
21.3.2 The buyer having met our qualifications for new franchisees;
- 21.3.3 The buyer's upgrade of the Business to conform with our then-current specifications;
- 21.3.4 We are provided with an executed agreement of sale between you and the buyer;
- 21.3.5 The buyer's successful completion of our training program as stated in Section 4.1;
- 21.3.6 The buyer's receipt of your last year's business tax return and other documents relevant to your Business;
- 21.3.7 Your execution (or your principals' execution, as applicable) of a general release, in a form prescribed by us, of all claims against us and our officers, directors, agents, and employees. Notwithstanding such release, you shall remain obligated under those provisions of this Agreement that expressly extend beyond the term hereof;
- 21.3.8 The buyer's execution of our then-current Single Unit Franchise Agreement as well as execution of a personal guaranty if a partnership, corporation or limited liability company;
- 21.3.9 Payment to us of a transfer fee in the amount of (a) Five Thousand Dollars ($5,000) per owner no matter how many businesses you are transferring, if the transfer is of a Mr. Sandless Business or a combination Mr. Sandless Business; or (b) One Thousand Dollars ($1,000) per owner no matter how many businesses you are transferring;
- 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 com
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, several conditions must be met for a transfer of a franchise to be approved. If these conditions are not met, the transfer is effectively prohibited.
Specifically, the transferring franchisee must execute a general release of all claims against Mr. Sandless and its personnel. The buyer must execute the then-current Single Unit Franchise Agreement and a personal guaranty if the buyer is a partnership, corporation, or limited liability company. A transfer fee must be paid to Mr. Sandless, which is $5,000 per owner if transferring a Mr. Sandless Business or a combination Mr. Sandless Business, or $1,000 per owner. If the buyer is a corporation or LLC, they must meet Mr. Sandless's requirements for such entities, and Mr. Sandless must approve all shareholders or members and managers. Mr. Sandless may also require that a particular individual retain at least 51% ownership and serve as CEO or manager.
The buyer must obtain and maintain all required permits and licenses, and the transfer must comply with all applicable laws. Finally, the purchase price and terms of the transfer must not be so burdensome as to impair the buyer's future operation of the business. If any of these conditions are not met, Mr. Sandless may not approve the transfer, effectively prohibiting it.