Under what conditions does Beehive Homes have the option to purchase a franchisee's business?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | FRANCHISE AGREEMENT SECTION | SUMMARY |
|---|---|---|
| a. Length of the franchise | Section 5.1 | ten years |
| term | ||
| b. Renewal or extension of | Section 5.2 | additional ten year renewal periods if you |
| the term | are in good standing | |
| c. Requirements for franchisees to renew or extend | Section 5 | three to nine month advance notice, approval by US, and signing by YOU of the current form of franchise agreement, which may have materially different terms and conditions from your initial franchise agreement |
| d. Termination by YOU | Not Applicable | Not Applicable |
| e. Termination by US without | Not Applicable | Not Applicable |
| cause | ||
| f. Termination by US with cause | Section 14 | WE can terminate if YOU commit certain events of default or other breaches of the Franchise Agreement |
| g. "Cause" defined - curable defaults | Section 14.1 | YOU have 30 days to cure: nonpayment of fees, nonperformance of franchise agreement where performance can be completed |
| h. “Cause” defined - non- curable defaults | Section 14.1 | non-curable defaults: bankruptcy (may not be enforceable under federal bankruptcy law), unauthorized transfers, abandonment, trademark misuse |
| i. YOUR obligations on termination/nonrenewal | Section 14.4; 14.5; 14.6 & 14.7 | pay amounts due; sell Home to Franchisor |
| j. Assignment of contract by | Section 13.1 | Assignee reasonably willing and able to |
| US | perform | |
| k. "Transfer" by YOU - | Section 2.20; | includes transfer of contract or assets and |
| defined | 13.2 | change in ownership |
| l. OUR approval of transfer | Section 13.4 | prior written approval but not |
| by YOU | unreasonably withheld | |
| m. Conditions for OUR | Section 13.4 | payment of fees, new franchise |
| approval of transfer | agreement, training | |
| n. OUR right of first refusal | Section 13.6 | WE can match any offer |
| to acquire YOUR business | ||
| o. OUR option to purchase YOUR business | Section 14.5 | WE can purchase YOUR business for the initial cost of the real property and the book value of the personal property upon an Event of Default |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 25–27)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, Beehive Homes has the option to purchase a franchisee's business under specific circumstances. The FDD outlines that Beehive Homes can exercise this option if an Event of Default occurs.
The purchase price in such a scenario is defined as the initial cost of the real property plus the book value of the personal property. This means that if a franchisee defaults on their agreement, Beehive Homes can buy the business, but the compensation is limited to the original cost of the real estate and the depreciated value of the personal property used in the business.
This arrangement has significant implications for potential franchisees. It is crucial to understand what constitutes an Event of Default, as this could trigger Beehive Homes' right to purchase the business. The franchisee would need to carefully consider the potential financial impact of such a purchase, especially if the business has appreciated in value since its inception. It is advisable to seek legal counsel to fully understand the conditions under which default can occur and the implications of this clause.