Does Pearce Bespoke have approval rights regarding the transfer of the Development Agreement by the franchisee?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary |
|---|---|---|
| Schedule by any Opening Deadline specified in the Development Schedule; any Franchise Agreement is terminated a result of default; or you breach or otherwise fail to comply fully with any other provision of the Development Agreement. Subject to state law. | ||
| i. Franchisee's obligations on termination/non-renewal | Section 6.2 | You will lose the right to continue to develop Franchised Businesses in your Development Area. |
| j. Assignment of contract by us | Section 7 | Fully assignable and transferrable by us. |
| k. "Transfer" by franchisee – | Section 7 | Includes transfer of the Development Agreement, any |
| definition | interest in the Development Agreement, or, if you are a business entity, any interest in the entity. | |
| l. Our approval of transfer by | Section 7 | We have the right to approve or not approve all transfers |
| franchisee | in our sole discretion. | |
| m. Conditions for our approval of | Section 7 | We have sole discretion in setting conditions for our |
| transfer | approval of a transfer. | |
| n. Our right of first refusal to acquire franchisee's business | Section 7 | We have the first right of refusal on all transfer, exercisable withing 30 days of receiving an executed copy of the contract of transfer. |
| o. Our option to purchase your | Not Applicable | Not Applicable |
| business | ||
| p. Death or disability of | Not Applicable | We have the right approve or disapprove any transfer in |
| franchisee | our sole discretion. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 31–34)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, Pearce Bespoke retains the right to approve or disapprove any transfer of the Development Agreement by the franchisee. The FDD specifies that this approval is at Pearce Bespoke's sole discretion, meaning they have significant control over who can take over a Development Agreement. This is a standard practice in franchising, as franchisors want to ensure that any new developer meets their standards and has the resources to successfully expand the brand.
The document defines "transfer" broadly, including the transfer of the Development Agreement itself, any interest in the agreement, or any interest in the business entity if the franchisee is not an individual. This comprehensive definition aims to prevent franchisees from circumventing the transfer restrictions through indirect means. Pearce Bespoke also has the right to set conditions for approving a transfer, giving them further leverage to ensure the transfer aligns with their strategic goals.
In addition to approval rights and setting conditions, Pearce Bespoke also has a right of first refusal to acquire the franchisee's business. This means that before a franchisee can transfer the Development Agreement to a third party, they must first offer Pearce Bespoke the opportunity to purchase the business on the same terms. Pearce Bespoke has 30 days to exercise this right of first refusal after receiving an executed copy of the transfer contract. This provision protects Pearce Bespoke's interests by allowing them to maintain control over the development of their brand and potentially consolidate operations if desired.
These provisions regarding transfer are important for prospective Pearce Bespoke franchisees to understand. The franchisor's broad discretion in approving transfers, setting conditions, and exercising a right of first refusal could impact a franchisee's ability to exit the business or realize the full value of their investment. Franchisees should carefully consider these factors and seek legal counsel to fully understand their rights and obligations under the Development Agreement.