What happens if a proposed Mr. Sandless transferee is a competitor of the franchisor?
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, the company can refuse a franchise transfer if the proposed transferee is a competitor. Specifically, the FDD states that a franchisor has the right to deny a transfer for 'good cause,' and explicitly lists a proposed transferee being a competitor as an example of 'good cause.'
This means that if a Mr. Sandless franchisee wants to sell their franchise to someone who also owns or operates a competing floor refinishing business, Mr. Sandless can block the sale. This provision protects Mr. Sandless from having its business methods and trade secrets fall into the hands of a direct competitor.
For a prospective franchisee, this clause highlights the importance of finding a buyer who is not already involved in a competing business if they decide to sell their Mr. Sandless franchise. While this might limit the pool of potential buyers, it is a standard provision in many franchise agreements designed to protect the franchisor's interests and competitive advantage.