If a Pearce Bespoke franchisee fails to cure a default, can this be grounds for denying 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 Pearce Bespoke's 2025 Franchise Disclosure Document, a franchisee's failure to cure a default can indeed be grounds for denying a transfer. Specifically, the FDD states that all of the franchisee's accrued monetary obligations to Pearce Bespoke and its suppliers must be satisfied, and the franchisee must not be in default under the Franchise Agreement as a condition for transfer.
This condition means that if a Pearce Bespoke franchisee has any outstanding payments or has failed to meet other obligations outlined in the agreement and has not corrected these issues, Pearce Bespoke can withhold its consent to the transfer of the franchise. This protects Pearce Bespoke by ensuring that new franchisees are not burdened with unresolved financial or operational problems from the previous owner.
For a prospective Pearce Bespoke franchisee, this highlights the importance of maintaining good standing with the franchisor and fulfilling all contractual obligations. Before attempting to sell or transfer the franchise, franchisees should ensure they have resolved any outstanding defaults to avoid potential roadblocks in the transfer process. This requirement is fairly standard in franchising, as franchisors typically want to ensure a smooth transition and protect the brand's reputation.