What criteria does Red Wagon Club use to evaluate the terms and conditions of a proposed transfer?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
Subject to the other provisions of this Section 16, if Franchisee and Franchisee's owners are fully complying with this Agreement, Franchisor will approve a transfer that meets all of the requirements in this Section 16.C.
If the proposed transfer is not of a Controlling Interest (defined below) in Franchisee or Franchisee's owners (determined as of the date on which the proposed transfer will occur), then Franchisor will approve such transfer if the proposed transferee and its direct and indirect owners (if the transferee is an entity) are of good character and meet Franchisor's then applicable standards for franchise owners (including no ownership interest or performance of services for a Competitive Business). Franchisor will, in its sole discretion, determine if the proposed transferee is direct or indirect owners (if the transferee is an entity) meets Franchisor's standards. If the proposed transfer is of this Agreement, Franchisee's RWC Business, substantially all the assets of Franchisee's RWC Business, or a Controlling Interest in Franchisee or one of Franchisee's owners, or is one of a series of transfers (regardless of the time period over which these transfers take place), which in the aggregate transfers this Agreement, Franchisee's RWC Business, substantially all the assets of Franchisee's RWC Business, or a Controlling Interest in Franchisee or one of Franchisee's owners, then all of the following conditions must be met before or concurrently with the effective date of the transfer:
(1) Franchisee submits an application, in writing, requesting Franchisor's consent and providing Franchisor all information or documents Franchisor requests about the transferee and its owners that Franchisor requests to evaluate their ability to satisfy their respective obligations under Franchisor's then-current form of franchise agreement and any documents ancillary thereto, and each such person must have completed and satisfied all of Franchisor's application and certification requirements, including the criteria that neither the transferee nor its owners (if the transferee is an
entity) or affiliates have an ownership interest (direct or indirect) in or perform services for a Competitive Business;
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, the criteria for transfer approval depend on whether the transfer involves a Controlling Interest. If the franchisee and its owners are in full compliance with the Franchise Agreement, Red Wagon Club will generally approve a transfer that meets the requirements outlined in Section 16.C of the agreement.
For transfers not involving a Controlling Interest, Red Wagon Club will approve the transfer if the proposed transferee and their owners are of good character and meet the then-current standards for franchise owners. This includes not having an ownership interest in or performing services for a Competitive Business. Red Wagon Club has sole discretion in determining whether the transferee meets these standards.
For transfers of the Franchise Agreement, the RWC Business, substantially all of the RWC Business assets, or a Controlling Interest, several conditions must be met. The franchisee must submit a written application requesting consent and provide all requested information and documents about the transferee and its owners. The transferee and its owners must also satisfy all of Red Wagon Club's application and certification requirements, including not having an ownership interest in or performing services for a Competitive Business.