What documents must a Red Wagon Club franchisee provide to the franchisor to affect a transfer?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
ee shall not use or authorize the use of, and no third party shall on Franchisee's behalf use, any written materials to advertise or promote the transfer of Franchisee's RWC Business or of any ownership interest in Franchisee without Franchisor's prior written approval of such materials.
16.C. CONDITIONS FOR APPROVAL OF TRANSFER.
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;
- (2) Franchisee has provided Franchisor executed versions of any documents executed by Franchisee (or Franchisee's owners) and the transferee (and its owners) to affect the transfer, and all other information Franchisor requests about the proposed transfer, and such transfer meets all of Franchisor's requirements, including criteria for terms and conditions, closing date, purchase price, amount of debt and payment terms;
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, a franchisee seeking to transfer their franchise must submit several documents to the franchisor for approval. Specifically, the franchisee must provide a written application requesting the franchisor's consent, including all information or documents the franchisor requests about the prospective transferee and their owners. This information is used to evaluate the transferee's ability to meet the obligations outlined in the current franchise agreement and related documents. All individuals involved must also fulfill the franchisor's application and certification requirements.
In addition to the application, the franchisee must provide executed versions of any documents signed by the franchisee (or their owners) and the transferee (and their owners) to facilitate the transfer. The franchisor also requires any other information it deems necessary regarding the proposed transfer, ensuring that all requirements are met, including criteria related to terms and conditions, closing date, purchase price, debt amount, and payment terms. The franchisee (and their owners) and the transferee (and their owners) must sign all documents that the franchisor requires in connection with the transfer, in a form satisfactory to the franchisor.
Furthermore, the franchisee must provide evidence that appropriate measures have been taken to affect the transfer as it relates to the operation of the Red Wagon Club business. This includes transferring all necessary and appropriate business licenses, insurance policies, and material agreements, or obtaining new ones. The franchisor may also request additional evidence to demonstrate that the transfer is being handled properly. These measures ensure that the transfer process is thorough and that the new franchisee is fully prepared to operate the Red Wagon Club business according to the franchisor's standards.