Franchise Owner Dies: The Estate Has 60 Days to 12 Months

Three franchise agreements read in full for this page each set a deadline for an estate to transfer the business after the owner dies, and those deadlines are 60 days, 6 months, 9 months and 12 months depending on the brand and, at one brand, on which of its agreements was signed.

The clock starts at death. The number is in your agreement. Most owners have never looked.

The three deadlines, in the franchisors’ own words

Smoothie King (Item 17, Section 15.3): “Your estate must transfer your interest to your heirs or beneficiaries, or a third party approved by Smoothie King within 6 months.”

Freshii (Item 17, area development agreement table, Section 11E): “Must transfer to approved party within 9 months.” Its single-unit franchise agreement table sets the same 9 months at Section 13E. Its multi-unit site selection agreement table gives 60 days, at Section 5.3.

Kung Fu Tea (Item 17, Section 4.2.6): “The estate or personal representative must assign the franchise to an approved buyer within 12 months in the event of death, and 6 months in the event of disability.”

Twice the time at one brand as another, for the same event. There is no industry standard here, which is precisely why the specific number in your own agreement matters more than any general guidance.

And the number can differ inside a single brand. Freshii prints three Item 17 tables, one per agreement type, and they do not agree with each other: 9 months under the area development agreement and under the single-unit franchise agreement, but 60 days under the multi-unit site selection agreement. An executor who reads the wrong table is wrong by more than seven months. Find the table that matches the agreement actually signed.

The one exemption worth knowing about

Smoothie King’s agreement requires consent for all transfers except a transfer to an heir or beneficiary after death or mental incapacity. Its transfer fees may also be reduced for immediate family members.

That is a meaningful distinction, and neither of the other two documents states an equivalent. It does not mean the business simply passes without involvement: whoever operates it still has to satisfy the franchisor’s requirements. But the transfer itself being exempt from consent is a materially different starting position from needing approval for it.

Do not assume your agreement works the same way. These three brands, all in the same broad category, handle it three different ways.

What the documents do not say

What happens if the deadline passes. All three state the requirement. None states the consequence of missing it, which means the answer lives in the wider default and termination provisions of the agreement rather than in Item 17.

This is the same shape as the missing exercise window on the right of first refusal and the missing approval timeline: the disclosure document tells you an obligation exists and leaves the mechanics to the agreement behind it. Getting a straight answer is work for a franchise attorney with your agreement in front of them.

Whether the personal guarantee follows. Nothing in the three documents addresses whether an estate inherits the deceased owner’s personal guarantee, or whether a spouse who signed one remains bound. A guarantee does not end simply because the business changes hands, and where a business carries an SBA loan there is a second guarantee on a separate approval track. Both Freshii and Kung Fu Tea separately disclose that a spouse may be required to sign a guarantee covering all financial obligations despite having no ownership interest. What happens to that on death is not stated.

What an owner can do now

This page cannot give legal or estate-planning advice, and succession planning for a franchised business is genuinely work for a franchise attorney and an estate lawyer together. What it can tell you is which facts to go and collect.

Find your number. Item 17 of your disclosure document, under death or disability, and the section it cites in your franchise agreement.

Write it down where it will be found. Alongside the location of the franchise agreement itself, the franchisor’s contact for transfers, and the name of an attorney who knows the brand.

Ask the franchisor what it expects. Whether an heir must be pre-approved, whether the business can keep trading during a transfer, and who it will deal with in the interim.

Ask what happens to the guarantee. Yours and, if applicable, your spouse’s.

The whole point of knowing the number is that the person who will need it is not you.

Questions to ask a franchise attorney

• What deadline does my agreement set after death, and after disability?
• What happens if that deadline is missed?
• Does a transfer to my heir or beneficiary require the franchisor’s consent under my agreement?
• Must an heir be pre-approved, and against what criteria?
• Can the business continue trading during the transfer, and who may operate it in the interim?
• Does my personal guarantee survive my death, and does my spouse’s?
• Does the franchisor’s right of first refusal apply to a transfer on death?
• How should this be reflected in my will and in my succession planning?