Can Bang Cookies exercise a right of first refusal to purchase a franchise?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
14.F. FRANCHISOR'S RIGHT OF FIRST REFUSAL
If Franchisee or an Owner desires to engage, in whole or in part, in a Transfer of Franchisee, this Agreement, Franchisee's Shop, Franchisee's Shop Facility, and/or Franchisee's Shop Location, then Franchisee or such Owner (as applicable) must obtain a bona fide, signed written offer from the fully disclosed purchaser (the "Offer") and submit an exact copy of the Offer to Franchisor. Franchisor shall have 30 days after receipt of the Offer to decide whether Franchisor will purchase the interest in Franchisee, Franchisee's Shop, Franchisee's Shop Facility, and/or Franchisee's Shop Location for the same price and upon the same terms contained in the Offer (however, Franchisor may substitute cash for any form of payment proposed in the Offer). If Franchisor notifies Franchisee that Franchisor intends to purchase the interest within said 30 day period, Franchisee or Owner (as applicable) must sell the interest to Franchisor. Franchisor will have at least an additional 60 days to prepare for closing. Franchisor shall be entitled to receive from Franchisee or Owner (as applicable) all customary representations and warranties given by Franchisee or Owner (as applicable) as the seller of the assets and/or the ownership interest or, at Franchisor's election, the representations and warranties contained in the offer. If Franchisor does not exercise its right of first refusal, Franchisee or Owner (as applicable) may complete the Transfer to the purchaser pursuant to and in accordance with the terms of the Offer, provided that separate and apart from this Article 14.F. right of first refusal, Franchisee complies with the terms of this Article 14. However, if the sale to the purchaser is not completed within 120 days after delivery of the Offer to Franchisor, or there is a material change in the terms of the sale, Franchisor will again have the right of first refusal specified in this Article 14.F. Franchisor's right of first refusal in this Article 14.F. shall not apply to any Transfer pursuant to Article 14.E. of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, Bang Cookies retains a right of first refusal if a franchisee intends to transfer their franchise. If a franchisee wants to transfer ownership, they must first get a written offer from a potential buyer and provide a copy of that offer to Bang Cookies.
Bang Cookies then has 30 days to decide if it wants to purchase the franchise on the same terms as the offer, although Bang Cookies can substitute cash for other forms of payment. If Bang Cookies decides to purchase the franchise, the franchisee is obligated to sell it to them, and Bang Cookies will have at least 60 additional days to prepare for the closing.
The right of first refusal does not apply to transfers made under Article 14.E of the agreement. If the sale to the third-party buyer isn't completed within 120 days after the offer was initially given to Bang Cookies, or if the terms of the sale materially change, Bang Cookies has the right of first refusal again.