Does Mrcool franchisor's approval of a transfer constitute a warranty of the franchised business's success or profitability?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
- (15) Franchisee and transferee acknowledge and agree that Franchisor's approval of the Transfer indicates only that the transferee meets, or Franchisor waived, the criteria established by Franchisor expenses incurred in the operations of Franchisee's Center or to any creditor of Franchisee for any products, materials, supplies or services purchased by Franchisee's Center.
Franchisor has the right to charge a reasonable fee for such management services and may cease to provide management services at any time.
- (2) If Franchisee is a Corporate Entity, upon the death or permanent disability of Franchisee's Managing Owner, the remaining Owners within a reasonable time, which shall not exceed 30 days from the date of death or permanent disability must appoint a new Managing Owner that is approved by Franchisor.
The appointed Managing Owner must attend and successfully complete the Training Program within 60 days of the appointment.
If Franchisee's Center is not being managed by a Franchisor approved Managing Owner (as applicable) within 30 days after such death or permanent disability, Franchisor is authorized, but is not required, to immediately appoint a manager to maintain the operations of Franchisee's Center for, and on behalf of, Franchisee at Franchisee's sole costs until an approved Managing Owner is able to assume the management and operation of Franchisee's Center.
Franchisor's appointment of a manager for Franchisee's Center does not relieve Franchisee of its obligations under this Agreement, including this Article 14.D., or constitute a waiver of Franchisor's right to terminate this Agreement pursuant to Article 16, below.
At all times, including while Franchisee's Center may be managed by Franchisor's appointed for franchisees as of the time of such transfer, and Franchisor's approval thereof does not constitute a warranty or guaranty by Franchisor, express or implied, of the suitability of the terms of sale, successful operation, or profitability of the Franchised Business;
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the franchisor's approval of a franchise transfer does not constitute a warranty or guarantee of the franchised business's future success or profitability. Mrcool's approval only indicates that the transferee meets the company's criteria for franchisees at the time of the transfer or that Mrcool has waived certain criteria.
This means that while Mrcool assesses the transferee's qualifications, business experience, and financial resources, this assessment does not guarantee the business will be successful under the new owner. Prospective franchisees should not interpret Mrcool's approval of a transfer as an endorsement of the business's financial viability or a promise of future profits.
It is the responsibility of the prospective transferee to conduct their own due diligence and assess the business opportunity's potential. This includes reviewing financial records, market conditions, and other relevant factors to determine if the franchise is a worthwhile investment. Mrcool explicitly states that its approval does not imply any warranty regarding the suitability of the sale terms, the operation, or the profitability of the business.