What is the timeframe within which the Representative of a deceased or mentally incompetent person with a Controlling Ownership Interest in The Standardx must transfer the Owner's interest?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the death or mental incompetency of a person with a Controlling Ownership Interest in Franchisee or one of its Controlling Owners, that person's executor, administrator, or personal representative ("Representative") must, within six (6) months after the date of death or mental incompetency, transfer the Owner's interest in Franchisee or the Controlling Owner to a third party or to the other
Owner(s) of Franchisee, if any, subject to the conditions set forth in Section 12.4(a), 12.4(b), and 12.4(f) above, and provided that at least one Guarantor that satisfies the Guarantor Monetary Threshold (as it may be increased in accordance with Exhibit B-1). In the case of a transfer by devise or inheritance, if the heirs or beneficiaries cannot meet the foregoing conditions within this six (6)-month period, the Representative will have twelve (12) months from the date of death or mental incompetency to dispose of the interest in accordance with this Section 12.7. If this required transfer does not occur within the required timeframe, Hyatt shall have the right to terminate this Agreement upon written notice to Franchisee, provided that Franchisee will not be liable for liquidated damages pursuant to Section 16.5 or Brand Damages in connection with such termination.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, if a person with a Controlling Ownership Interest in the Franchisee becomes deceased or mentally incompetent, their Representative must transfer the Owner's interest within six months of the date of death or mental incompetency. This transfer can be to a third party or to other existing owners of the Franchisee, provided certain conditions are met, including that at least one Guarantor satisfies the Guarantor Monetary Threshold.
However, The Standardx allows for an extension in certain cases. If the transfer is happening through inheritance and the heirs or beneficiaries cannot meet the initial conditions within the six-month period, the Representative is granted a twelve-month period from the date of death or mental incompetency to complete the transfer.
If the transfer does not occur within the specified time frame, The Standardx has the right to terminate the Franchise Agreement with written notice to the Franchisee. However, the Franchisee will not be held liable for liquidated damages or Brand Damages in connection with such termination.