In Michigan, what constitutes 'good cause' for Mr. Sandless to terminate a franchise agreement?
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 the 2025 Mr. Sandless Franchise Disclosure Document, Michigan law impacts franchise agreements, specifically regarding the transfer of ownership. Michigan prohibits franchisors from unreasonably withholding the transfer of a franchise, except for "good cause."
'Good cause' includes several factors related to the proposed transferee. These are: if the proposed transferee fails to meet Mr. Sandless's current reasonable qualifications or standards, if the proposed transferee is a competitor of Mr. Sandless, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, or if the franchisee or proposed transferee fails to pay any sums owing to Mr. Sandless or to cure any default in the franchise agreement at the time of the proposed transfer.
This means that Mr. Sandless can only prevent a transfer if the potential new franchisee doesn't meet their standards, is a competitor, won't agree to the franchise terms, or if there are outstanding payments or uncured defaults. This provision aims to protect franchisees from arbitrary denials of transfer requests, while still allowing Mr. Sandless to maintain standards and protect its brand.