How does the Beehive Homes franchisor exercise its right to purchase the franchisee's property?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor's election, to obliterate or destroy any Names and Marks in Franchisee's possession;
- (e) To take all necessary steps to disassociate itself from Franchisor, including, but not limited to, the removal of signs, destruction of letterhead, disconnecting of all telephone numbers listed under any of the Names or Marks or under any confusingly similar name and, upon Franchisor's request, transferringallsuch numbers and listings to Franchisor or its designee;
- (f) To take such action as shall be necessary to amend or cancel any assumed name, business name or equivalent registration which contains any Names or Marks;
- (g) To cease all operations at the Location;
- (h) To furnish evidence satisfactoryto Franchisor of compliancewith this Section within the thirty (30) calendar days after the termination or expiration under this Agreement; and
- (i) If Franchisee fails to promptly complete any of the foregoing steps, Franchisee hereby irrevocably appoints Franchisor as its attorney-in-fact to complete the foregoing steps for and on the behalf of the Franchisee.
- 14.5. Franchisor's Right to Purchase. As additional consideration for this Agreement, Franchisee hereby gives and grants to Franchisor and its designees, the unrestricted right and option, exercisable upon the occurrence of an Event of Default described in Section 14.1 above, and subject to the notice requirements of Section 14.2 above, or upon the occurrence of an Election Not to Renew as defined in Section 5.2 of this Agreement, or termination or expiration of this Agreement, to purchase (i) all or any portion of the Personal Property (consisting of all furniture, equipment, supplies, other chattels, intangibles and other property) in use at the Home, and/or (ii) all right, title and interest of Franchisee or its Equity Owner(s) in and to the Real Property (Home). Franchisor or its designee may exercise this right and option by delivering to Franchisee a written Notice of Exercise on or before the date which is ninety (90) days after the later of (x) the occurrence of an Event of Default; or (y) the expiration of this Agreement after Franchisee's Election Not to Renew. This right and option is in addition to any other remedies available to Franchisor at law or pursuant to this Agreement.
The exercise price for the Personal Property shall be the tax basis of such property then shown on Franchisee's books and records for federal income tax purposes. Franchisee covenants and agrees that it will not, without the prior written consent of Franchisor, remove any of the Personal Property from the Home prior to the expiration of this right and option.
The exercise price for the Real Property comprising the Home shall be the Franchisee's and/or its Equity Owner's initial cost of the Real Property, including approved debt financing.
The exercise price for this right and option shall be paid within ninety (90) days after delivery of the Notice of Exercise to the Franchisee and shall be applied (i) first, to the satisfaction of any lien of the Small Business Administration; (ii) second, to the satisfaction of all unpaid obligations of Franchisee to Franchisor, including costs, expenses and reasonable attorneys' fees
incurred in the exercise of this right; (iii) third, to the satisfaction of all mortgages, security interests, liens or encumbrances of any kind, plus accrued interest, penalties and other charges; and (iv) fourth, the balance, if any, shall be paid to Franchisee.
If the exercise price for the subject property is not sufficient to give Franchisor clear title to such property, then Franchisee hereby expressly authorizes Franchisor, or its designated agent, to negotiate with claim holders for the transfer of clear title to such property to Franchisor upon such terms and conditions as are acceptable to Franchisor. Franchisee expressly authorizes a continuation of the time for payment of the exercise price to the date which is thirty (30) days after the termination or completion of negotiations between Franchisor and the aforementioned claimholders. Franchisor shall have no obligation to pay the exercise price if Franchisor is unable to obtain title satisfactoryto Franchisor. Exercise of this right by Franchisor shall confer no rights upon Franchisee and Franchisor's failure to timely pay the exercise price shall result in termination of the right with no further obligation or duty to Franchisor.
The parties hereto acknowledge and agree that any exercise of Franchisor's rights provided for herein shall be subordinate to and subject to any lien of the Small Business Administration.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the franchisor has the right to purchase the franchisee's property under specific circumstances. Beehive Homes can exercise this right if an Event of Default occurs, if the franchisee elects not to renew the agreement, or upon the termination or expiration of the franchise agreement. To exercise this option, Beehive Homes must deliver a written Notice of Exercise to the franchisee within ninety (90) days after the later of the Event of Default or the expiration of the agreement following the franchisee's decision not to renew. This right applies to both personal property used at the home and the real property itself.
The price Beehive Homes will pay for the personal property is the tax basis of the property as shown on the franchisee's books for federal income tax purposes. For the real property, the price is the franchisee's or its equity owner's initial cost, including approved debt financing. The franchisor will pay the exercise price within ninety (90) days after delivering the Notice of Exercise. The funds will be applied in a specific order: first, to satisfy any lien of the Small Business Administration; second, to cover any unpaid obligations of the franchisee to Beehive Homes, including costs and attorney's fees; third, to satisfy all mortgages, security interests, liens, or encumbrances, including accrued interest and penalties; and finally, the remaining balance, if any, will be paid to the franchisee.
If the exercise price is insufficient to provide Beehive Homes with clear title to the property, the franchisee authorizes Beehive Homes to negotiate with claim holders to transfer clear title under terms acceptable to Beehive Homes. The payment deadline can be extended by thirty (30) days after negotiations with claim holders conclude. However, Beehive Homes has no obligation to pay the exercise price if it cannot obtain satisfactory title. The franchisor's failure to pay on time results in termination of the purchase right with no further obligation. Any exercise of these rights by Beehive Homes is subordinate to any lien of the Small Business Administration.
This clause ensures that Beehive Homes has a mechanism to regain control of a location if the franchisee defaults, chooses not to renew, or upon expiration of the agreement, while also outlining the financial terms and conditions of such a transaction. For a prospective franchisee, this means understanding the conditions under which Beehive Homes can repurchase the property and how the purchase price will be determined and distributed, which is crucial for long-term financial planning and risk assessment.