What constitutes 'good cause' for Pearce Bespoke to refuse a transfer of ownership in Michigan?
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 Pearce Bespoke's 2025 Franchise Disclosure Document, the addendum required by the state of Michigan addresses the conditions under which Pearce Bespoke can refuse a transfer of ownership of a franchise. Specifically, Pearce Bespoke can refuse a transfer for 'good cause'.
'Good cause' includes several factors related to the proposed transferee. These include the failure of the proposed transferee to meet Pearce Bespoke's current reasonable qualifications or standards. It also covers situations where the proposed transferee is a competitor of Pearce Bespoke or its subfranchisor. Additionally, if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations, Pearce Bespoke has grounds to refuse the transfer.
Furthermore, 'good cause' exists if either the franchisee or the proposed transferee has failed to pay any sums owed to Pearce Bespoke or has not cured any default in the franchise agreement at the time of the proposed transfer. However, this does not prevent Pearce Bespoke from exercising a right of first refusal to purchase the franchise.