Under what conditions can Mr. Sandless refuse to permit a transfer of ownership of a franchise?
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, specifically in the state of Michigan, there are certain conditions under which Mr. Sandless can refuse to permit a transfer of ownership of a franchise. These conditions are considered "good cause."
Mr. Sandless may refuse a transfer if the proposed transferee does not meet the franchisor's current reasonable qualifications or standards. Another reason for refusal is if the proposed transferee is a competitor of Mr. Sandless or its subfranchisor. Mr. Sandless can also refuse the transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations.
Additionally, Mr. Sandless can refuse a transfer if the franchisee or the proposed transferee has not paid all sums owing to the franchisor or has failed to correct any default in the franchise agreement that exists at the time of the proposed transfer. However, it's important to note that this does not prevent Mr. Sandless from exercising a right of first refusal to purchase the franchise.