In the context of an Angry Chickz franchise assignment, what does 'ROFR' stand for, and how does it affect the assignment process?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.3 Right of First Refusal.
If Franchisee or any Owner (other than Company, if applicable) desire to cause or permit any Assignment, then Franchisee and/or such Owner shall notify Company in writing, provide such information and documentation describing or relating to the proposed Assignment as Company may require, and grant Company (and its designee) a right of first refusal (the "ROFR") for 60 days following Company's receipt of Franchisee's written notice of the proposed Assignment and copies of all required documentation (the "ROFR Period") to purchase the interest which Franchisee or such Owner proposes to transfer, on the same terms and conditions offered by the third party; provided that Company (and its designee) may substitute cash for any non-cash consideration in an amount determined by Company (or designee as applicable), reasonably and in good faith, as the approximate equivalent value of the non-cash consideration.
Franchisee shall comply with each of its obligations under this Agreement during the ROFR Period, and Company (and its designee) shall have the right, but not the obligation, to offset any payment due to Franchisee on account of any default hereunder by Franchisee.
Notwithstanding the terms and conditions offered by the third party, Franchisee shall make representations and warranties to Company (and its designee) that are customary for transactions
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, ROFR stands for "right of first refusal." If a franchisee or any owner (excluding Angry Chickz itself) wishes to assign their rights, they must first notify Angry Chickz in writing and provide all necessary information about the proposed assignment. This grants Angry Chickz a 60-day period, known as the "ROFR Period," to decide whether to purchase the interest on the same terms and conditions offered by the third party.
During this ROFR Period, the franchisee must continue to fulfill all obligations under the franchise agreement. Angry Chickz has the right, but not the obligation, to offset any payments due to the franchisee against any defaults by the franchisee. Even if the terms offered by the third party include non-cash considerations, Angry Chickz can substitute cash in an amount that it reasonably and in good faith determines to be the equivalent value.
This right of first refusal allows Angry Chickz to maintain control over who becomes a franchisee within their system. It ensures that Angry Chickz has the opportunity to acquire the franchise if the terms are acceptable, preventing potentially unsuitable franchisees from entering the system. This is a fairly common practice in franchising, as franchisors want to carefully vet and approve anyone taking over an existing franchise to protect their brand and system standards.
For a prospective Angry Chickz franchisee, this means that if they ever decide to sell their franchise, Angry Chickz has the first option to buy it. This could potentially delay or complicate the sale process, as the franchisee must wait out the 60-day ROFR Period. However, it also provides a potential ready buyer in Angry Chickz, which could be beneficial if finding a suitable third-party buyer proves difficult.