Does the Mr. Sandless non-compete agreement apply if the franchise agreement is transferred?
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 the 2025 Mr. Sandless Franchise Disclosure Document, if a Mr. Sandless franchise is transferred, the original franchisee remains obligated under the provisions of the Franchise Agreement that expressly extend beyond the term of the agreement. As part of the transfer requirements, the buyer must execute Mr. Sandless's current Single Unit Franchise Agreement, which would include the non-compete agreement. The FDD does not explicitly state that the non-compete agreement transfers to the new franchisee, but it does state that the buyer must execute the current franchise agreement, which includes a non-compete.
To complete the transfer of a Mr. Sandless franchise, the transferring franchisee must execute a general release of all claims against Mr. Sandless and its representatives. The buyer of the franchise must also execute the then-current Single Unit Franchise Agreement and a personal guaranty if the buyer is a partnership, corporation, or limited liability company. Mr. Sandless also requires payment of a transfer fee: $5,000 per owner for a Mr. Sandless Business transfer or $1,000 per owner.
Additionally, the buyer must meet Mr. Sandless's requirements for corporations or limited liability companies, obtain all necessary permits and licenses, and comply with all applicable laws governing franchise transfers. The purchase price and terms of the transfer must not be so burdensome as to impair the buyer's ability to operate the business and fulfill the franchise agreement. Prospective franchisees should clarify with Mr. Sandless whether the non-compete agreement in the original franchise agreement remains in effect for the original franchisee after the transfer is complete.