What happens if the Franchisor of Bevaris Alliance gives a Purchase Notice to the Individual?
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, if the Franchisor gives a Purchase Notice to the Individual within 20 Business Days of receiving a Transfer Notice, the Franchisor is obligated to buy, and the Individual is obligated to sell, all of the Sale Shares at the Proposed Sale Price. This sale must be completed within 20 Business Days of receipt (or deemed receipt) of the Purchase Notice.
In simpler terms, if an individual franchisee of Bevaris Alliance decides to sell their shares and notifies the Franchisor, Bevaris Alliance has the option to purchase those shares themselves at the price offered by the proposed buyer. This is known as the Proposed Sale Price. If Bevaris Alliance decides to exercise this option by issuing a Purchase Notice, the individual is legally bound to sell their shares to Bevaris Alliance at that price.
This clause ensures that Bevaris Alliance retains control over who becomes a shareholder within their franchise system. It allows them to prevent unwanted third parties from acquiring ownership stakes in a franchise location. For a prospective franchisee, this means that selling shares isn't as simple as finding a buyer; Bevaris Alliance has the first right to purchase those shares.
It's important to note that if Bevaris Alliance does not issue a Purchase Notice within the specified 20 Business Day period, the individual is then free to sell their shares to the original proposed purchaser, provided the sale occurs within 60 days of the initial 20 Business Day period's expiration and that all other criteria outlined in clause 16.11 are met. This process ensures a balance between the franchisee's right to sell and Bevaris Alliance's right to maintain control over its franchise network.