What constitutes an invalid transfer that could lead to the termination of the Spray Net franchise agreement?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
ligations within 30 days; and (vii) cancel or, at our option, assign us all telephone/facsimile numbers and domain |
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| names (if permitted) used in connection with the Franchised Business (as well as all related listings) to us or our designee. | |||
| j. | Assignment of contract by Franchisor | Section 13(G) | No restriction on our right to assign. |
| k. | "Transfer" by | Section 13(A) | Includes any transfer of Franchise Agreement, assets of the |
| Franchisor – | and Section | Franchised Business, or ownership change in you (as the | |
| defined | 13(C) | Franchisee). | |
| l. | Franchisor's approval of transfer by Franchisee | Section 13(A) | We must approve all transfers, but we will not unreasonably withhold our approval if you meet our conditions. |
| m. | Conditions for Franchisor's approval of transfer | Section 13(E) | We have the right to impose the following conditions on any transfer by you: (i) all of your accrued monetary obligations under the Franchise Agreement have been satisfied; (ii) you cure all existing defaults under the Franchise Agreement; (iii) you and your principals must execute a general release; (iv) you or the transferee provides us with a copy of the executed purchase agreement; (v) the transferee must meet our then-current qualifications and criteria for a new franchisee; (vi) the transferee executes our then-current franchise agreement; (vii) you or the transferee pays us a transfer fee of $10,000; (viii) the transferee satisfactorily completes our Initial Training Program; (ix) you must comply with all post-termination provisions of the Franchise Agreement; (x) the transferee must obtain all permits and licenses required for the continued operation of the Franchised Business; (xi) all applicable lessors consent to the proposed transfer; (xii) if applicable, you reimburse us for any and all costs of brokerage commissions, finder's fees, or similar charges; and (xiii) the transfer is made in compliance with all applicable laws. |
| n. | Franchisor's right of first refusal to acquire Franchisee's business | Section 13(D) | If (a) you propose to transfer any of your interest in the Franchise Agreement or Franchised Business or any interest in your lease for the Premises, or (b) your owners propose to transfer any interest in you (if you are an entity), except in certain circumstances (death/disability or transfer from individual franchisee to business entity), then you shall first offer to sell such interest to us on the same terms and conditions as offered by such third party. If we do not exercise this right, then you will have 60 days to effectuate the transfer to the third party that made the offer on those exact terms – if the transfe |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–62)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, a 'transfer' includes any transfer of the Franchise Agreement, the assets of the Franchised Business, or a change in ownership of the franchisee. Spray Net must approve all transfers, and it will not unreasonably withhold approval if the franchisee meets certain conditions.
Spray Net has the right to impose several conditions on any transfer. These include ensuring all accrued monetary obligations are satisfied, curing any existing defaults under the Franchise Agreement, and obtaining a general release from the franchisee and its principals. Additionally, Spray Net requires a copy of the executed purchase agreement, and the transferee must meet the current qualifications for new franchisees and execute the then-current franchise agreement. A transfer fee of $10,000 must be paid, and the transferee must complete the Initial Training Program.
Further conditions include compliance with post-termination provisions, obtaining necessary permits and licenses, securing lessor consent, and reimbursing Spray Net for any brokerage commissions or finder's fees. The transfer must also comply with all applicable laws. Moreover, if the franchisee proposes to transfer any interest in the Franchise Agreement, Franchised Business, or ownership (except in cases of death/disability or transfer from an individual to a business entity), Spray Net has a right of first refusal to acquire the interest on the same terms offered by a third party. If Spray Net waives this right, the franchisee has 60 days to complete the transfer to the third party under the original terms; any changes to the terms give Spray Net another 30 days to exercise its right of first refusal.
Therefore, failure to meet any of these conditions or to adhere to the right of first refusal could render a transfer invalid, potentially leading to termination of the Spray Net franchise agreement. Prospective franchisees should carefully review Section 13 of the Franchise Agreement to fully understand the requirements and implications of transferring their franchise.