What is the definition of 'Purchase Notice' in the context of transferring shares of Bevaris Alliance?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, a 'Purchase Notice' is a written notification from the franchisor to the individual shareholder indicating the franchisor's intent to buy the shares being offered for sale. This notice must be given within 20 business days of the franchisor receiving the 'Transfer Notice'. The 'Transfer Notice' informs the franchisor of the shareholder's intention to sell their shares and includes the name of the proposed purchaser and the price offered for the shares, referred to as the 'Proposed Sale Price'.
If Bevaris Alliance issues a 'Purchase Notice', it is obligated to buy, and the shareholder is obligated to sell, all of the shares at the 'Proposed Sale Price'. The sale must be completed within 20 business days of the franchisor's receipt of the 'Purchase Notice'. This clause ensures that Bevaris Alliance has the first right to acquire the shares before they are sold to a third party.
If Bevaris Alliance does not provide a 'Purchase Notice' within the specified 20 business day period, the shareholder is then permitted to proceed with the sale of shares to the proposed purchaser identified in the 'Transfer Notice'. However, the sale must occur within 60 days of the expiration of the initial 20 business day period, and the sale price cannot be less than the 'Proposed Sale Price'. This process allows the shareholder to transfer their shares if Bevaris Alliance declines to purchase them, subject to certain conditions and timeframes.
This process is typical in franchising to allow the franchisor to maintain control over who becomes a shareholder in a franchise location. It ensures that Bevaris Alliance can vet and approve potential new owners, maintaining brand standards and operational consistency. Prospective franchisees should understand these conditions, as they impact the ability to sell their ownership stake in the franchise.