What is the definition of 'Proposed Sale Price' in the context of transferring shares in a Bevaris Alliance franchise?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
dual wishes to transfer its shares in the Franchisee (Sale Shares) to a third party and has received an offer from a bona fide third-party purchaser for the Sale Shares, the Individual must first give a Transfer Notice to the Franchisor (giving details of the proposed transfer including):
- (a) the name of the proposed purchaser; and
- (b) the price (in cash) that the proposed purchaser has offered to pay for the Sale Shares (Proposed Sale Price).
- 16.3 Purchase notice. Within 20 Business Days of receipt (or deemed receipt) of a Transfer Notice, the Franchisor shall be entitled (but not obliged) to give notice in writing to the Individual that it wishes to purchase the Sale Shares at the Proposed Sale Price (Purchase Notice), in which case the Franchisor is bound to buy and the Individual is bound to sell all of the Sale Shares at the Proposed Sale Price, with such sale to complete within 20 Business Days of receipt (or deemed receipt) of the Purchase Notice.
- 16.4 Transfer where no Purchase Notice given. If, at the expiration of the initial period specified in clause 16.3, the Franchisor has not given a Purchase Notice, the Franchisee may transfer the Sale Shares to the proposed purchaser identified in the Transfer Notice at a price not less than the Proposed Sale Price provided that it does so within 60 days of the expiration of the initial 20 Business Day period specified in clause 16.3 and the criteria set out in clause 16.11 are satisfied.
- 16.5 Entire share transfer for cash only. The Individual shall not be permitted to transfer some only of its shares.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, the 'Proposed Sale Price' is defined as the price, in cash, that a proposed purchaser has offered to pay for the sale shares of the franchise.
This definition is important because it sets the benchmark for any potential sale of shares. Bevaris Alliance retains the right to purchase the shares at the 'Proposed Sale Price' within 20 business days of receiving a transfer notice. This is known as a 'Purchase Notice'. If Bevaris Alliance does not exercise this right, the franchisee can then transfer the shares to the proposed purchaser, but the price cannot be less than the initially 'Proposed Sale Price'.
However, there is an exception to this rule. In the event of a transfer to Bevaris Alliance itself, the 'Proposed Sale Price' will be determined as the fair market value by a certified public accounting firm selected by Bevaris Alliance. This ensures that the price is objectively determined in such a transaction. This clause does not apply if the transfer is to a third party.