What section of the Red Wagon Club Franchise Agreement defines 'transfer' by the Red Wagon Club franchisee?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
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;
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, Section 16.C of the Franchise Agreement outlines the conditions for approval of a transfer by the franchisee. This section indicates that if the franchisee and their owners are in full compliance with the agreement, Red Wagon Club will generally approve a transfer that meets all the requirements detailed in Section 16.C.
The conditions for transfer approval vary depending on whether the transfer involves a Controlling Interest in the franchisee or their owners. If the transfer is not of a Controlling Interest, Red Wagon Club will approve the transfer if the proposed transferee and their owners are of good character and meet the franchisor's standards for franchise owners, including not having an interest in a Competitive Business. Red Wagon Club has the sole discretion to determine if the proposed transferee meets these standards.
However, if the transfer involves the Franchise Agreement itself, the RWC Business, substantially all of the assets of the RWC Business, or a Controlling Interest in the franchisee or one of the franchisee's owners, then additional conditions must be met. These conditions include submitting a written application requesting consent, providing all requested information about the transferee and their owners, and ensuring that neither the transferee nor their owners have an ownership interest in or perform services for a Competitive Business. All parties involved must also satisfy Red Wagon Club's application and certification requirements.