Does Red Wagon Club require franchisor approval for all transfers by the franchisee?
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 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)
What This Means (2024 FDD)
According to the 2024 Red Wagon Club Franchise Disclosure Document, Red Wagon Club requires franchisor approval for transfers of the franchise. If the franchisee and their owners are in full compliance with the agreement, Red Wagon Club will approve a transfer that meets all the requirements outlined in Section 16.C of the franchise agreement.
For transfers that are not of a Controlling Interest, Red Wagon Club will approve the transfer if the proposed transferee and its owners are of good character and meet Red Wagon Club's standards for franchise owners. Red Wagon Club has the sole discretion to determine if the proposed transferee meets these standards, which include not having an ownership interest in or performing services for a Competitive Business.
For transfers involving the Franchise Agreement, the RWC Business, substantially all the assets of the RWC Business, or a Controlling Interest in the franchisee or one of its owners, several conditions must be met. The franchisee must submit a written application requesting Red Wagon Club's consent and provide all requested information about the transferee and its owners. The transferee and its owners must also meet Red Wagon Club's application and certification requirements, including not having an ownership interest in or performing services for a Competitive Business.