In Michigan, under what conditions can Pearce Bespoke refuse a transfer of ownership of a franchise?
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, Michigan law specifies conditions under which Pearce Bespoke can refuse a franchise transfer. Pearce Bespoke can refuse a transfer for 'good cause.' This includes situations where the proposed transferee doesn't meet Pearce Bespoke's current qualifications or standards.
Pearce Bespoke can also refuse a transfer if the proposed transferee is a competitor. Refusal is permitted if the proposed transferee is unwilling to agree in writing to comply with all lawful obligations. Additionally, Pearce Bespoke can refuse a transfer if the franchisee or proposed transferee has not paid sums owing to Pearce Bespoke or has failed to resolve any existing default in the franchise agreement at the time of the proposed transfer.
It is important to note that Michigan law does not prevent Pearce Bespoke from exercising a right of first refusal to purchase the franchise. This means that Pearce Bespoke has the option to buy the franchise themselves under the same terms and conditions as a legitimate third-party offer.