Does Pearce Bespoke require franchisee consent for transfers to trusts established for the franchisee's benefit?
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;
Franchisee executes a written agreement in a form satisfactory to Franchisor, in which Franchisee covenantsto observe all applicable post-term obligations and covenants contained in this Agreement;
The transferee-franchisee enters into a written agreement in a form satisfactory to Franchisor assuming and agreeing to discharge all of Franchisee's obligations and covenants under this Agreement for the remainder of its term or, at Franchisor's option, executes Franchisor's then-current standard form of franchise agreement which may not contain any further rights of renewal, but may contain royalty rates and advertising contributions (which may be different than those contained in this Agreement), and an altered Franchised Territory;
The transferee-franchisee is not a competitor of Franchisor or the Business system and is approved by Franchisor and demonstrates to Franchisor's satisfaction that he/she meets Franchisor's managerial, financial, and business standards for new franchisees, possesses a good business reputation and credit rating, and has the aptitude and ability to conduct the franchised business.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, a franchisee is generally prohibited from transferring their business, assets, or agreement without the prior written consent of Pearce Bespoke. However, an exception exists for transfers to trusts established for the franchisee's benefit, where franchisee consent is not required. Pearce Bespoke states that it will not unreasonably withhold consent for a transfer.
Despite not requiring consent for transfers to trusts, Pearce Bespoke may still impose certain conditions. These include ensuring that all monetary obligations to Pearce Bespoke and its suppliers are satisfied, and that the franchisee is not in default of the Franchise Agreement. The franchisee may also be required to execute a written agreement to observe post-term obligations.
Furthermore, the transferee (the trust, in this case) must enter into an agreement assuming all obligations under the Franchise Agreement for the remainder of its term. Alternatively, at Pearce Bespoke's option, the transferee may be required to execute Pearce Bespoke's then-current standard franchise agreement, which may have different terms, royalty rates, advertising contributions, and a different territory. The transferee must also not be a competitor and must meet Pearce Bespoke's standards for new franchisees.