What is the deadline for closing on the purchase if Beauty Bungalows elects to purchase the franchisee's interest?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
ted to you under this Agreement are personal to you and neither this Agreement, nor any of the rights granted to you hereunder nor any controlling equity interest in you may be voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, assigned or otherwise transferred, given away, or encumbered by you without our prior written approval, which we may grant or withhold for any or no reason.
7.2. Our Right of First Refusal.
- i. If you receive, and desire to accept, from a third party a bona fide offer to transfer any of your rights in this Agreement, you shall promptly notify us in writing and send us an executed copy of the contract of transfer. We shall have the right and option, exercisable within thirty (30) days after actual receipt of such notification or of the executed contract of transfer which shall describe the terms of the offer, to send written notice to you that we intend to purchase your interest on the same terms and conditions offered by the third party. We may charge a fee to transfer your rights under this Agreement (the "Transfer Fee") equal to $5,000 multiplied by the number of Franchised Businesses you intend to transfer, plus any third-party broker or agency fees that are incurred by us as a result of the transfer.
- ii. Closing on the purchase must occur within sixty (60) days from the date of notice by us to you of our election to purchase. If we elect not to accept the offer within the thirty (30) day period, you shall have a period not to exceed sixty (60) days to complete the transfer subject to our approval of the third-party transferee of your rights, which may be withheld in our sole discretion. Any material change in the terms of any offer before closing shall constitute a new offer subject to the same rights of first refusal by us as in the case of an initial offer.
- iii. Our failure or refusal to exercise the option afforded by this Section 7 shall not constitute a waiver of any other provision of this Agreement.
iv. If the offer from a third-party provides for payment of consideration other than cash or involves certain intangible benefits, we may elect to purchase the interes
Source: Item 23 — RECEIPTS (FDD pages 48–177)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, if a franchisee receives a legitimate offer from a third party to transfer their rights in the Area Development Agreement and wishes to accept it, they must promptly inform Beauty Bungalows in writing and provide a copy of the transfer contract. Beauty Bungalows then has 30 days to notify the franchisee of their intent to purchase the franchisee's interest on the same terms and conditions as the third-party offer.
The closing on the purchase must occur within 60 days from the date Beauty Bungalows notifies the franchisee of its election to purchase the interest. If Beauty Bungalows decides not to accept the offer within the initial 30-day period, the franchisee has 60 days to complete the transfer to the third party, subject to Beauty Bungalows' approval of the third party.
If the third-party offer involves non-cash consideration or intangible benefits, Beauty Bungalows can choose to purchase the interest for a reasonable cash equivalent, publicly traded securities, or similar intangible benefits. If the parties cannot agree on the cash equivalent, an independent appraiser designated by Beauty Bungalows will determine the amount, and this determination will be binding. This process ensures that Beauty Bungalows can match the value of the offer even if it's not in a standard cash format.
This right of first refusal allows Beauty Bungalows to maintain control over who enters their franchise system and ensures consistent brand standards. For a prospective franchisee, this means that selling their franchise is not solely their decision, and Beauty Bungalows has the option to step in and purchase the business themselves under the same terms offered by a third party.