What constitutes 'good cause' for Pearce Bespoke to refuse a transfer of ownership?
Pearce_Bespoke 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 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, Pearce Bespoke can refuse a transfer of ownership for 'good cause.' This includes several specific situations that protect the brand and the network of franchisees.
The first instance of 'good cause' is if the proposed transferee does not meet Pearce Bespoke's current qualifications or standards. This ensures that any new franchisee taking over an existing location is capable of maintaining the brand's quality and operational standards. Another instance is if the proposed transferee is a competitor of Pearce Bespoke, which prevents potential conflicts of interest and protects the brand's competitive position.
Additionally, Pearce Bespoke can refuse a transfer if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations. This ensures that the new franchisee is committed to adhering to the franchise agreement and all applicable laws. Finally, failure of the franchisee or proposed transferee to pay any outstanding sums to Pearce Bespoke or to resolve any existing default in the franchise agreement also constitutes 'good cause' for refusing the transfer. This protects Pearce Bespoke's financial interests and ensures that all franchisees are in good standing.
These conditions are fairly standard in franchising, as franchisors typically want to maintain control over who joins their system to protect the brand and ensure consistent quality and compliance across all locations.