Under what conditions can Auntie Annes exercise its right of first refusal to acquire an Auntie Annes business?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| o. You must comply with our right of first refusal. p. If you operate a Co-Branded Shop, the Co-Branded Agreement or Co- Branded Franchise are transferred at the same time. | ||
| FA: 16.4 (non-control transfers) | a. You give us prior written notice of the transfer. b. You pay all sums owed. c. You are not in default d. Transferee meets qualifications e. Transferee signs assignment and guaranty f. You and your guarantors and owners sign a general release. g. You remain liable for pre-Transfer obligations. h. You pay us a Transfer Fee. | |
| FA: 16.5 (related party transfers) | a. You give us prior written notice of the transfer. b. You are not in default c. Transferee meets qualifications d. Transferee assumes in writing the Franchise Agreement and the guaranty. e. You may not be in default under the Franchise Agreement. f. You pay us a Transfer Fee. g. You and your guarantors and owners must sign a general release and remain liable for pre-Transfer obligations | |
| n. Our right of first refusal to acquire your business | FA: 16.8 | We can match any offer for your Shop or substantially all interests in your entity. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 86–91)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, Auntie Annes has the right of first refusal if a franchisee decides to sell their business. Specifically, Auntie Annes can match any offer that a franchisee receives for their Shop or for substantially all interests in the franchisee's entity. This provision is detailed in Section 16.8 of the Franchise Agreement.
For a prospective franchisee, this means that if they decide to sell their Auntie Annes franchise, they must first offer Auntie Annes the opportunity to buy the business on the same terms as any other potential buyer. Auntie Annes has the right to match the offer, effectively preventing the franchisee from selling to another party if Auntie Annes chooses to exercise this right.
This right of first refusal allows Auntie Annes to maintain control over who becomes a franchisee and ensures that the brand's standards and reputation are upheld. It also provides Auntie Annes with an opportunity to expand its corporate-owned store network if it deems a particular location valuable. Franchisees should be aware of this provision as it can impact their ability to sell their business to a buyer of their choice.