Under what conditions can Stretch Zone unreasonably withhold consent to the transfer of a franchise in Minnesota?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) With respect to Franchises governed by Minnesota law, the Franchisor will comply with Minnesota Statutes, Section 80C.14, Subd. 3-5, which requires (except in certain specified cases) (1) that a Franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the Franchise Agreement and (2) that the consent to the transfer of the Franchise will not be unreasonably withheld.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, the Minnesota Addendum to the Franchise Agreement addresses franchise transfers. Specifically, for franchises governed by Minnesota law, Stretch Zone must comply with Minnesota Statutes, Section 80C.14, Subd. 3-5. This statute mandates that consent to the transfer of a franchise will not be unreasonably withheld.
This provision means that Stretch Zone cannot arbitrarily deny a franchisee's request to transfer their franchise to a qualified buyer. The franchisor must have legitimate, justifiable reasons for withholding consent. These reasons typically relate to the proposed transferee's financial stability, business experience, management capabilities, and willingness to adhere to the franchise agreement and brand standards.
For a prospective Stretch Zone franchisee in Minnesota, this addendum offers significant protection. It prevents Stretch Zone from blocking a sale based on unreasonable or discriminatory grounds. However, it's important to note that Stretch Zone still has the right to ensure that any potential transferee meets reasonable and objective criteria to protect the integrity of the franchise system. Franchisees should carefully review the franchise agreement and any related addenda to fully understand the conditions under which a transfer may be approved or denied.