Does a transferee assuming rights and obligations under the 360 Painting agreement also become subject to the franchisor's right of first refusal?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
or's credit shall be deemed equal to the credit of any proposed buyer. After providing notice to Franchisee, Franchisor shall have up to sixty (60) days to close the purchase. Franchisor shall be entitled to receive from Franchisee all customary representation and warranties given by Franchisee as the seller of the assets or such ownership interest. If Franchisor does not exercise this right of first refusal within thirty (30) days, the offer or proposal may be accepted by Franchisee or its owners, subject to the prior written approval by Franchisor, as provided in this Section of the proposed Transfer. Should the sale fail to close within one hundred twenty (120) days after the offer is delivered to Franchisor, Franchisor shall again have the right of first refusal herein described. Should a transferee assume the rights and obligations under this Agreement, such transferee shall likewise be subject to Franchisor's right of first refusal under terms and conditions as set forth herein. A decision of the Franchisor not to exercise the right of first refusal granted by this Section will not constitute a waiver of any other provision of this Agreement, including all of the transfer requirements of this Section, with respect to a proposed transfer.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, a transferee who assumes the rights and obligations under the franchise agreement is also subject to 360 Painting's right of first refusal. This means that if a franchisee wants to sell their 360 Painting franchise, they must first offer 360 Painting the opportunity to buy it on the same terms as any other potential buyer.
360 Painting has the option to match the offer made by a potential buyer, including substituting cash for the fair market value of any proposed form of payment and having its credit deemed equal to any proposed buyer's credit. After the franchisee provides notice, 360 Painting has up to 60 days to close the purchase. The franchisee must also provide 360 Painting with customary representations and warranties as the seller.
If 360 Painting decides not to exercise its right of first refusal within 30 days, the franchisee can proceed with the sale to the other buyer, subject to 360 Painting's prior written approval. However, if the sale does not close within 120 days after the offer was initially delivered to 360 Painting, the right of first refusal is reinstated. A decision by 360 Painting not to exercise its right of first refusal for one proposed transfer does not waive any other rights or transfer requirements under the agreement.