Under the Spray Net franchise agreement, is a franchisee allowed to transfer their interest in the agreement without prior written consent from the franchisor?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
how the Proprietary Products are prepared and/or used by Franchisee once they are delivered to Franchisee. Franchisee must indemnify and hold Franchisor (and/or its designated supplier) harmless in connection with any third-party claims or damages arising out of or related to claims involving how the Proprietary Products are prepared and/or used by Franchisee once they are delivered to Franchisee.
13. TRANSFER AND ASSIGNMENT
A. No Transfer by Franchisee Without Franchisor's Approval. Franchisee's rights under this Agreement are personal, and Franchisee shall not sell, transfer, assign or encumber Franchisee's interest in this Agreement or the Franchised Business (or undertake any of the actions identified in Section 13(C) of this Agreement) without Franchisor's prior written consent. Any sale, transfer, assignment or encumbrance made without Franchisor's prior written consent shall be voidable at Franchisor's option and shall subject this Agreement to termination as specified herein.
B. Death or Disability.
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- In the event of Franchisee's death, disability or incapacitation (or the death, disability or incapacitation of Franchisee's principals/owners/guarantors), Franchisee's legal representative, or Franchisee's partner's or guarantor's respective legal representative, as applicable, will have the right to continue the operation of the Franchised Business as "Franchisee" under this Agreement if: (i) within one hundred and eighty (180) days from the date of death, disability or incapacity (the "180 Day Period"), such person has obtained Franchisor's prior written approval and has executed Franchisor's then-current franchise agreement for the unexpired term of the franchise, or has furnished a personal guaranty of any partnership, corporate or limited li
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, a franchisee's rights under the franchise agreement are personal, and the franchisee is not allowed to sell, transfer, assign, or encumber their interest in the agreement or the franchised business without obtaining prior written consent from Spray Net. Any attempt to do so without this consent is voidable at Spray Net's discretion and may lead to the termination of the agreement. This requirement ensures that Spray Net maintains control over who operates a franchise under its brand.
There are specific instances related to ownership that also require Spray Net's prior written consent. If the franchisee is a corporation, any transfer of ownership shares or an increase in outstanding shares that results in a change of ownership requires consent. The same applies to partnerships and limited liability companies, where the transfer of any fractional ownership interest necessitates approval. This provision aims to prevent unauthorized changes in the ownership structure of the franchise.
However, a transfer to an existing partner or shareholder, or a transfer resulting from death, disability, or incapacitation of a shareholder or partner, may not be subject to Spray Net's first right of refusal, provided that Spray Net's prior written consent is obtained, and such consent will not be unreasonably withheld. In the event of death, disability, or incapacitation, the franchisee's legal representative has 180 days to obtain written approval from Spray Net and execute the current franchise agreement or provide a personal guarantee to continue operating the franchise.