How long does Baya Bar have to close the purchase if it exercises its right of first refusal?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
16.6.2 Franchisor has the right, exercisable by written notice to Franchisee within thirty (30) days after receipt of written notification and copies of all documentation required by Franchisor describing such offer, to buy the interest in this Agreement and the Franchised Business or the Principal's interest in Franchisee for the price and on the terms and conditions contained in the offer, subject to Section 16.6.3.
16.6.3 Franchisee further agrees, in the event Franchisor exercises its right of first refusal, notwithstanding anything to the contrary contained in the offer, that (i) Franchisor may substitute cash for any other form of consideration contained in the offer; (ii) at Franchisor 's option, Franchisor may pay the entire purchase price at closing; (iii) Franchisor 's credit will be deemed equal to the credit of any proposed transferee; (vi) Franchisor will have at least sixty (60) days to close the purchase; and (v) Franchisor will be entitled to receive from the Franchisee all customary representations and warranties given by a seller of the assets of a business or equity interest in an entity, as applicable.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if a franchisee wishes to transfer their interest in the franchised business, Baya Bar has the right of first refusal. Baya Bar has 30 days to provide written notice to the franchisee after receiving notification of the offer and all required documentation.
If Baya Bar exercises its right of first refusal, the company has at least 60 days to close the purchase. During this period, Baya Bar can substitute cash for any other form of consideration in the offer and can choose to pay the entire purchase price at closing. Additionally, Baya Bar's credit will be considered equal to that of any proposed transferee.
This clause provides Baya Bar with considerable flexibility and control over who becomes a franchisee within its system. For a prospective franchisee, this means that selling their business may take longer if Baya Bar decides to exercise its right of first refusal. The franchisee must also provide customary representations and warranties to Baya Bar, similar to what would be given to any other buyer.