Does Bevaris Alliance have a right of first refusal to acquire a franchisee's business?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| which must be approved by us. | ||
| l. Bevaris approval of transfer | Section | We have the right to approve all transfers, which shall be |
| by franchisee | 16.11 | subject to the provisions of the Franchise Agreement. |
| m. Conditions for Bevaris approval of transfer | Section 16.11 | Transferee approved by us, transfer fee paid, transferee not competitor, your account is current, you sign a release, transferee signs all documents, lender consents, and subordination agreements. |
| n. Bevaris’ right of first refusal to acquire franchisee’s business | Section 16.3 | Bevaris can match any offer for the purchase of Your franchise at Bevaris’ option. |
| o. Bevaris’ option to purchase Your business | Section 16.7 | Upon transfer, fair market value (but no value for goodwill), legal compliance, no assumption of your liabilities. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 17–18)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, Bevaris Alliance retains the right of first refusal to acquire a franchisee's business. Specifically, Bevaris Alliance has the option to match any offer a franchisee receives for the purchase of their franchise. This provision is detailed in Section 16.3 of the Franchise Agreement.
This right of first refusal means that if a franchisee receives an offer to buy their Bevaris Alliance franchise, they must first present that offer to Bevaris Alliance. Bevaris Alliance then has the option to purchase the franchise on the same terms as the offer. This clause allows Bevaris Alliance to control who enters the franchise system and prevents unwanted or potentially harmful parties from becoming franchisees.
Additionally, Bevaris Alliance also has the option to purchase a franchisee's business upon transfer, as outlined in Section 16.7 of the Franchise Agreement. In this scenario, the purchase price is based on the fair market value of the business, excluding any value for goodwill. Bevaris Alliance will also ensure legal compliance and will not assume any of the franchisee's liabilities. This provides Bevaris Alliance with another avenue to acquire existing franchise locations under specific conditions.
Prospective franchisees should carefully consider the implications of these provisions. While the right of first refusal and the option to purchase provide Bevaris Alliance with control over franchise ownership, they may also limit a franchisee's ability to sell their business to the highest bidder or to realize the full value of their investment, including goodwill. Understanding these terms is crucial for making an informed decision about investing in a Bevaris Alliance franchise.