The franchisor does not allow the franchisee to transfer the franchise without authorization. The franchisor should be clear in the contract period contract transfer conditions, the applicant franchisee should be fully prepared in determining whether to join the franchise system should be fully considered not easy to withdraw from the franchise system this point. Franchise contract provides: without the written consent of the franchise headquarters, Party B (the franchisee) shall not transfer the franchise to others. Otherwise, Party A (the franchisor) has the right to terminate this contract and pursue Party B for breach of contract.

Example: McDonald's Franchise Controls Questioned Franchisee Suspected of Transferring Equity Privately

Recently, Changsha's McDonald's Pinghe Tang Wuyi Square store encountered a group of people blocking the door. A man who called himself Li Bo posted a "warning letter" at the door. The "warning letter" reads: Mai Xiang Catering, Li Qingjiang, according to you and us (Li Bo, Zheng Xiaojing, Zheng Bo, Liu Fei four people) signed on September 16, 2012, "Investment Cooperation Agreement" agreement, our cumulative investment of tens of millions of dollars for McDonald's restaurant operations, enjoying 35% of the proceeds and interests.

It is understood that the McDonald's restaurant is blocking the door belongs to Hunan Maixiang Catering Investment Company Limited (referred to as "Maixiang Catering"), Maixiang Catering for the Hunan McDonald's the actual operator behind the scenes, the company was established on July 13, 2012, is currently responsible for McDonald's in Hunan Province, the operation of 55 stores! The company was established on July 13, 2012, and is currently responsible for the operation of 55 McDonald's stores in Hunan province, and is also the designated operator of McDonald's "Developmental Franchise" business in Hunan.

At present, in the Mai Xiang catering business registration information, only shows that the company's registered capital of 100 million yuan, of which the shareholders Li Qingjiang 95 million, accounting for 95% of the shares, Liang Zhenzhen 5 million, accounting for 5% of the shares. But the claiming party Li Bo to the "First Financial Daily" reporter said he and some friends also contributed 35 million registered capital, accounting for 35% of Hunan McDonald's shareholding, and other shareholders signed an "investment cooperation agreement", signed the agreement **** there are 5 people, respectively, Li Qingjiang, Zheng Xiaojing, Zheng Bo, Liu Fei and Li Bo. If Qingjiang Li had privately signed the equity transfer or substitution agreement with the others, Qingjiang Li's practice would be a clear violation of McDonald's regulations.

Li Weihua, an associate professor at the business school of China University of Political Science and Law and an expert on franchising chains, told reporters: "Whether in China or in McDonald's global franchising system, the franchisee does not have the right to transfer the interests of the stores to other people in various forms, including the complete transfer and the partial transfer of the form of equity. Even said that after the death of the franchisee, the franchisee's spouse and children want to inherit the McDonald's franchise stores, but also need to get the authorization of the McDonald's Corporation agreed to do so."

-- FranchiseFirst.com