Is an All States M.E.D. franchisee required to submit an offer to the franchisor if the sale or transfer is to a family member?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
liable for trespass or any related tort. Franchisor may charge a management fee as stated in the Operations Manual from time to
time, currently equal to $250 per person per day, and Franchisor shall be entitled to reimbursement of any expenses Franchisor incurs that are not paid out of the operating cash flow of the Franchised Business.
19. RIGHT OF FIRST REFUSAL
19.1 Submission of Offer
If Franchisee, or any of its owners, proposes to sell or otherwise transfer (including a transfer by death or Incapacity according to Section 18.6) the Franchised Business (or any of its assets outside of the normal course of business), any ownership interest in Franchisee or any ownership interest in the Franchise granted hereunder, Franchisee shall obtain and deliver a bona fide, executed written offer or proposal to purchase, along with all pertinent documents including any contract or due diligence materials, to Franchisor, except with regards to a sale or transfer to a family member. The offer must apply only to an approved sale of the assets or interests listed above and may not include any other property or rights of Franchisee or any of its owners.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, a franchisee is not required to submit an offer to the franchisor when selling or transferring their franchise to a family member. Specifically, the franchisee does not need to provide All States M.E.D. with a written offer or proposal to purchase the franchise in such cases. This exemption applies to the sale or transfer of the franchised business, any ownership interest in the franchisee, or any ownership interest in the franchise itself.
However, it is important to note that this exception does not relieve the franchisee from complying with Section 18.2 of the agreement, which likely outlines other requirements or conditions that must be met before the sale or transfer can be completed. This means that while the right of first refusal is waived for family transfers, other approval processes or conditions may still apply.
This provision offers a potential benefit to All States M.E.D. franchisees who wish to keep the business within their family, simplifying the transfer process by removing the need for the franchisor's right of first refusal. However, franchisees should carefully review Section 18.2 of the franchise agreement to understand any remaining obligations or necessary approvals required for such a transfer.