What happens if a Pearce Bespoke franchisee is in default under the Franchise Agreement during a transfer?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Pearce Bespoke Franchisee (and its partners and shareholders, if any) will not transfer (whether voluntary or
involuntary), assign or otherwise dispose of, in one or more transactions, Franchisee's business, all or substantially all of the assets of Franchisee's business, this Agreement or any controlling interest in Franchisee (a "controlling" interest will include a proposed transfer of fifty percent (50%) or more of the Capital Stock of a corporate Franchisee) without Franchisor's prior written consent, except to trusts established for Franchisee's benefit. Franchisor will not unreasonably withhold its consent to a transfer, subject to any or all of the following conditions described below which Franchisor may deem necessary:
All of Franchisee's accrued monetary obligations to Franchisor and suppliers will have been satisfied, and Franchisee is not in default under this Agreement;
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, a franchisee cannot transfer their franchise if they are in default under the Franchise Agreement. Specifically, all accrued monetary obligations to Pearce Bespoke and its suppliers must be satisfied, and the franchisee must not be in default of the agreement. This condition ensures that the franchisor's financial interests are protected during the transfer process.
This requirement means that if a Pearce Bespoke franchisee has failed to pay royalties, supplier invoices, or is otherwise in breach of the Franchise Agreement, they will not be permitted to transfer the franchise to a new owner. This provision is fairly standard in franchising, as franchisors typically want to ensure that any outstanding debts or unresolved issues are cleared up before a transfer takes place. It protects the brand and ensures a smooth transition for the new franchisee.
For a prospective Pearce Bespoke franchisee, this highlights the importance of staying current with all financial obligations and adhering to the terms of the Franchise Agreement. Failure to do so could not only lead to termination of the agreement, but also prevent the franchisee from selling the business to recoup their investment. It is crucial to maintain a good standing with Pearce Bespoke to retain the option of transferring the franchise in the future.