Can a Mr. Sandless franchisee transfer their rights or obligations without franchisor approval?
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)
Based on the 2025 Mr. Sandless Franchise Disclosure Document, a Michigan addendum addresses the transfer of ownership of a franchise. Specifically, it states that Mr. Sandless cannot refuse a transfer of ownership except for good cause.
The FDD lists examples of "good cause" for denying a transfer. These include if the proposed transferee fails to meet Mr. Sandless's current qualifications or standards, if the transferee is a competitor, if the transferee is unwilling to comply with all lawful obligations in writing, or if the franchisee or transferee has unpaid sums or uncured defaults at the time of the proposed transfer.
This disclosure indicates that while a Mr. Sandless franchisee can transfer ownership, the franchisor retains the right to deny the transfer if certain reasonable conditions are not met. This is a fairly standard practice in franchising, allowing the franchisor to maintain brand standards and protect the franchise system.