Does Beauty Bungalows have the right of first refusal to purchase a franchisee's business?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) allow Franchisor the option, exercisable by Franchisor by written notice to Franchisee within thirty (30) days after expiration or earlier termination of this Agreement, to purchase from Franchisee any or all of the furnishings, equipment, signs, fixtures, supplies, materials and other assets related to the operation of the Business, at fair market value.
Franchisor shall purchase assets only and shall assume no liabilities, unless otherwise agreed in writing by the parties.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows's 2025 Franchise Disclosure Document, Beauty Bungalows has the option to purchase a franchisee's assets under certain conditions. Specifically, upon the expiration, non-renewal, or earlier termination of the Franchise Agreement (except if the franchisee terminates it under Section 13.01), Beauty Bungalows has the option for thirty (30) days to purchase some or all of the franchisee's assets related to the business at fair market value.
This means that if a Beauty Bungalows franchise agreement ends, Beauty Bungalows has the right to buy the business's furnishings, equipment, signs, fixtures, supplies, materials, and other assets. This right is exercisable within 30 days of the agreement's end. However, Beauty Bungalows is only obligated to purchase assets and does not assume any liabilities unless agreed to in writing.
This clause provides Beauty Bungalows with a mechanism to maintain control over its brand and potentially continue operations at a franchise location after the agreement with the franchisee concludes. For a prospective franchisee, this means that upon exiting the Beauty Bungalows system, they may be required to sell their business assets to Beauty Bungalows at fair market value, which could impact their exit strategy and potential return on investment.