Is the Beauty Bungalows franchisee required to obtain approval of the third-party transferee?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
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 t
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 Franchise Agreement and intends to accept it, they must promptly notify Beauty Bungalows in writing and provide an executed copy of the transfer contract. Beauty Bungalows then has the option to purchase the franchisee's interest on the same terms offered by the third party.
Beauty Bungalows has a right of first refusal, exercisable within 30 days of receiving notification of the offer. If Beauty Bungalows chooses not to exercise its right of first refusal, the franchisee has 60 days to complete the transfer. However, this transfer is subject to Beauty Bungalows' approval of the third-party transferee, which Beauty Bungalows can withhold at its sole discretion.
This means that even if Beauty Bungalows declines to buy the franchise themselves, they still have the power to reject the proposed buyer. Any material changes to the terms of the offer restarts the process, giving Beauty Bungalows another opportunity to exercise its right of first refusal. This clause ensures Beauty Bungalows maintains control over who enters their franchise system.