Does Amorino have a right of first refusal regarding the assignment of the Area Developer agreement?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly provided in Section 7.3 to the contrary, any assignment of this Agreement, or any interest herein, shall be subject to Company's right of first refusal with respect thereto. Company's said right of first refusal shall be exercised in the following manner:
- (a) Area Developer shall deliver to Company a written notice clearly and unambiguously setting forth all of the terms and conditions of the proposed assignment and all available information concerning the proposed assignee, including but not limited to, information concerning the employment history, financial condition, credit history, skill and qualifications of the proposed assignee and, in the case of a partnership or corporate assignee, of its partners and shareholders as applicable.
- (b) Within thirty (30) days after Company's receipt of such notice (or if Company shall request additional information, within thirty (30) days after receipt of such additional information), Company may either consent or withhold its consent to such assignment, in accordance with Section 7.3, or, at its option, accept the assignment to itself or to its nominee upon the terms and conditions specified in the notice. Company may substitute an equivalent sum of cash for any consideration other than cash specified in said notice.
- (c) If Company shall elect not to exercise its said right of first refusal and shall consent to such assignment, Area Developer shall, subject to the provisions of Section 7.3, be free to assign this Agreement to such proposed assignee on the terms and conditions specified in said notice. If, however, Company does not elect to exercise its right of first refusal and said terms shall be materially changed, or if more than 90 days shall pass without such assignment occurring, such changed terms or lapse of time shall be deemed a new proposal and Company shall again have such right of first refusal with respect thereto.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to the 2025 Amorino FDD, any assignment of the Area Developer Agreement or any interest within it is subject to Amorino's right of first refusal, with some exceptions outlined in Section 7.3. This means that before an Area Developer can transfer their agreement to someone else, Amorino has the option to step in and take over the agreement themselves or assign it to a nominee under the same terms.
To initiate the assignment process, the Area Developer must provide Amorino with a written notice detailing all terms and conditions of the proposed assignment, along with comprehensive information about the potential assignee. This includes their employment history, financial condition, credit history, skills, and qualifications. If the assignee is a partnership or corporation, similar information is required for its partners and shareholders.
Within 30 days of receiving this notice (or any additional information requested), Amorino can either consent to the assignment, withhold consent as per Section 7.3, or exercise its right of first refusal. If Amorino chooses not to exercise its right and consents to the assignment, the Area Developer can proceed with the transfer to the proposed assignee, adhering to the conditions specified in the initial notice and Section 7.3. However, if the terms change materially or the assignment does not occur within 90 days, it is considered a new proposal, and Amorino's right of first refusal is reinstated.