Can All County require a franchisee to resell items that are not uniquely identified with the franchisor?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 FDD, All County is generally prohibited from requiring a franchisee to resell items that are not uniquely identified with the franchisor. However, there are exceptions to this rule. All County can enforce a provision that grants them the right of first refusal to purchase the assets of a franchise on the same terms as a third party. Additionally, All County can acquire the assets of a franchise for market or appraised value if the franchisee has breached the franchise agreement and failed to correct the breach.
This means that while All County cannot force a franchisee to buy back generic items, they can still purchase the franchise's assets under certain conditions. This could occur if the franchisee wants to sell the business or if All County terminates the franchise agreement due to a breach by the franchisee.
For a prospective franchisee, this is important to understand because it outlines the circumstances under which All County might acquire the franchisee's assets. It's crucial to be aware of the conditions that could lead to a breach of the franchise agreement and the potential for All County to exercise its right to purchase the assets. This provision aims to protect franchisees from being forced to resell generic items back to the franchisor, while still allowing the franchisor to protect its interests in cases of transfer or breach of contract.