Will Red Wagon Club unreasonably withhold approval for a franchisee's relocation?

According to Red Wagon Club's 2024 Franchise Disclosure Document, franchisees may operate their Red Wagon Club business from the office of an affiliated law firm. However, if a franchisee wishes to operate their Red Wagon Club business from any other location, they must first obtain approval from Red Wagon Club. The FDD states that this approval "will not be unreasonably withheld," implying that Red Wagon Club will grant relocation requests unless there is a legitimate business reason to deny them.

This clause protects franchisees from arbitrary denials of relocation requests. However, Red Wagon Club retains the right to deny a relocation request if it harms the brand or other franchisees. For example, Red Wagon Club could reasonably deny a relocation request if the new location is too close to another existing Red Wagon Club franchise, or if the new location does not meet Red Wagon Club's standards for appearance and functionality.

It is important to note that the FDD does not define what constitutes an "unreasonable" denial. Therefore, a prospective franchisee should discuss specific relocation scenarios with Red Wagon Club to understand the criteria they will use to evaluate relocation requests. This will help the franchisee assess the flexibility they will have in choosing and changing their business location.