If a Spray Net franchisee is a partnership, what specific changes in partnership ownership interest trigger the need for Franchisor's consent?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Ownership. In addition to those acts described in Section 13(A), a transfer or assignment requiring Franchisor's prior written consent shall be deemed to occur: (i) if Franchisee is a corporation, upon any assignment, sale, pledge or transfer of any fractional portion of Franchisee's ownership shares/stock or any increase in the number of outstanding shares/stock of Franchisee's ownership/membership units that results in a change of ownership; (ii) if Franchisee is a partnership, upon the assignment, sale, pledge or transfer of any fractional partnership ownership interest; or (iii) if Franchisee is a limited liability company, upon the assignment, sale, pledge or transfer of any interest in the limited liability company.
Any new partner, shareholder, or member or manager owning having an ownership interest in the surviving entity after the proposed transfer will be required to personally guarantee Franchisee's obligations under this Agreement.
A transfer under (i) and (iii) above shall not be subject to Franchisor's right of first refusal as set forth in Section 13(D) so long as there is no change in control (ownership or otherwise) with respect to Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, if the franchisee is a partnership, any assignment, sale, pledge, or transfer of any fractional partnership ownership interest requires the franchisor's prior written consent. This means that even a small change in the ownership structure of the partnership requires approval from Spray Net.
This requirement ensures that Spray Net maintains control over who is involved in operating a franchise and protects the brand's reputation. Any new partner having an ownership interest in the entity after the proposed transfer will be required to personally guarantee the franchisee's obligations under the Franchise Agreement. This provides Spray Net with additional security and recourse in case of default or breach of contract.
However, a transfer under certain conditions, such as those involving corporations or limited liability companies, may not be subject to Spray Net's right of first refusal, provided there is no change in control (ownership or otherwise) with respect to the franchisee. This exception offers some flexibility for franchisees in those business structures. Prospective franchisees should carefully consider these requirements and consult with legal counsel to understand the implications of any potential ownership changes.