In Michigan, does Best Western have the right of first refusal to purchase the assets of a franchise?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, Michigan law addresses the right of first refusal. Specifically, Michigan law does not prevent Best Western from exercising a right of first refusal to purchase a franchise. This means that if a Best Western franchisee in Michigan decides to sell their franchise, Best Western may have the first opportunity to buy it, matching the terms offered by a third-party buyer.
This right is further qualified. Best Western can also acquire the assets of a franchise for market or appraised value if the franchisee has breached the franchise agreement and failed to correct the breach. This provides Best Western with options in cases where a franchisee is not complying with the terms of the agreement.
For a prospective Best Western franchisee in Michigan, this means that when planning an exit strategy, they need to be aware that Best Western might step in to purchase the franchise before it can be sold to someone else. It also highlights the importance of adhering to the franchise agreement to avoid Best Western acquiring the assets due to a breach.