What obligations regarding Competing Businesses must a Bft Franchisee and its selling owner(s) comply with if the Franchisor exercises its right of first refusal?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Within 30 days after Franchisor receives an exact copy of the bona fide offer and all information that Franchisor requests, Franchisor may, by written notice delivered to Franchisee or its selling owner(s), elect to purchase the interest offered for the price and on the terms and conditions contained in the offer. Franchisor may substitute any form of payment proposed in the offer as acceptable consideration. Franchisee and its owners must make all customary representations and warranties given by the seller of the assets of a business or the ownership interests in a legal entity, as applicable, and Franchisee and its selling owner(s) (and their immediate family members) must comply with the obligations regarding Competing Businesses, as though this Agreement had expired on the date of the purchase. Franchisor has the unrestricted right to assign this right of first refusal to its affiliate or an unaffiliated third party, who then will have the rights described in this Section 14.5.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, if Bft exercises its right of first refusal to purchase a franchisee's interest, the franchisee and its selling owner(s), including their immediate family members, must comply with the obligations regarding Competing Businesses as if the franchise agreement had expired on the date of purchase. This means the restrictions on operating or being involved with a competing business become immediately effective as though the agreement term ended.
These obligations, detailed elsewhere in the FDD, typically include restrictions on involvement with any business that competes with Bft, either by offering franchises or operating a competing business. These restrictions usually apply for a specific period after the agreement's termination or expiration and within a defined geographic area.
For a prospective Bft franchisee, this means that if they decide to sell their franchise and Bft exercises its right to buy it, the restrictions on competing with Bft will immediately apply to the franchisee, its selling owners, and their immediate family. This could significantly limit their ability to engage in similar fitness businesses or franchise ventures in the specified geographic area for the duration of the non-compete period. It is important to carefully review the specific terms of the non-compete obligations to understand the full scope of these restrictions.