Does the Mrcool FDD specify any limitations on the franchisee's ability to transfer the Multi-Unit Development Agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
(8) Unless Franchisee has met the requirements of Article 7.B. within the five year period immediately preceding the Transfer, the transferee, at its expense, must improve, modify, refurbish, renovate, remodel, and/or otherwise upgrade Franchisee's MRCOOL Center Facility to conform to the then current standards and specifications of Franchisor, and the transferee must complete such improvements, modifications, refurbishments, renovations, remodeling, and/or upgrading within the time period Franchisor reasonably specifies;
(9) Franchisee, each Owner, and each Spouse shall remain liable for all obligations to Franchisor set forth in this Agreement;
(10) At the transferee's expense, the transferee, and the transferee's Managing Owner, managers and/or any other applicable employees of transferee's MRCOOL Center must complete any training programs then in effect for franchisees of MRCOOL Centers upon terms and conditions
set forth in this Agreement or as Franchisor otherwise reasonably requires;
(11) Franchisee must pay the Transfer Fee to Franchisor;
(12) Franchisor's approval of the material terms and conditions of the Transfer, and Franchisor determines in Franchisor's Reasonable Business Judgment that the price and terms of payment are not so burdensome as to be detrimental to the future operations of the Franchised Business by the transferee;
(13) Transferee's employees, directors, officers, independent contractors, and agents who will have access to Confidential Information shall execute the Confidentiality Agreement attached hereto as Exhibit 2;
(14) Franchisee entering into an agreement with Franchisor agreeing to subordinate any obligations of transferee to make installment payments of the purchase price to Franchisee to the transferee's obligations to Franchisor, including, without limitation, transferee's obligations with respect to Royalty Fees and Advertising Contributions;
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to the 2025 Mrcool FDD, there are several conditions that a franchisee must meet to transfer their franchise agreement. While the excerpt does not specifically address the transfer of the Multi-Unit Development Agreement, it does outline requirements for transferring the standard Franchise Agreement, which would likely apply.
These conditions include the transferee meeting training requirements, and executing a confidentiality agreement if they will have access to confidential information. The franchisee must pay a $20,000 transfer fee to Mrcool. The transferee may also need to improve the Mrcool Center to meet current standards if the franchisee hasn't met certain requirements within the five years before the transfer.
Furthermore, Mrcool must approve the material terms of the transfer, ensuring that the price and payment terms are not detrimental to the business's future operations. The franchisee, owners, and spouses remain liable for all obligations to Mrcool, even after the transfer. The franchisee must also agree to subordinate any payment obligations from the transferee to Mrcool's royalty and advertising fee obligations.