Under what conditions might I be prohibited from purchasing Distribution Rights from Bimbo Foods Bakeries Distribution?
Bimbo_Foods_Bakeries_Distribution Franchise · 2025 FDDAnswer from 2025 FDD Document
TO THE CHAIN AT WHATEVER PRICES AND TERMS DISTRIBUTOR CAN NEGOTIATE. Distributor may revoke the designation of Bakery as Distributor's Representative at any time on thirty (30) days written notice. Nothing herein requires Bakery or Distributor to pay slotting allowances or other fees or charges imposed to obtain Product authorization in Chain Outlets.
ARTICLE 9 – SALE OF DISTRIBUTION RIGHTS
9.1 CONDITIONS OF SALE.
(a) Subject to the conditions and requirements herein, the Distribution Rights to all Outlets may be sold in whole or in part by Distributor, or in the event of the death of Guarantor, by a legal representative of Guarantor's estate, to a qualified purchaser, provided that, among other things, Distributor must first submit a written notice to Bakery, in a form acceptable to Bakery, of its intent to sell the Distribution Rights that is signed by Distributor and the proposed buyer ("Notice of Intent to Sell"). Distributor may sell any number of Outlet at a time, provided such sale is otherwise authorized
hereunder, and provided further that there must be no less than two Outlets remaining under this Agreement at all times.
- (i) All sales of the Distribution Rights are subject to the approval of Bakery, which may not be unreasonably withheld, and which such approval right includes Bakery's right to approve the proposed buyer as an owner of the Distribution Rights. Bakery has 14 days following its receipt of a fully completed and signed Notice of Intent to Sell, the receipt of all information and paperwork from Distributor and the proposed buyer reasonably requested by Bakery, or the date on which the proposed buyer meets with Bakery if Bakery so requests, whichever is later, to notify Distributor that it is denying approval of the proposed sale. If Bakery fails to notify Distributor that it is denying approval of the proposed sale within this 14-day timeframe and Bakery does not exercise its Right of First Refusal pursuant to Section 9.1(a)(ii), the proposed sale is deemed approved; however, provided Bakery is not responsible for any unreasonable delays, any approval under this Section may be voided by Bakery if the sale of the Distribution Rights is not finalized within 45 days from when the sale was actually or deemed to be approved, at which point all requirements and rights under this Article 9 reset anew. For the avoidance of doubt, Bakery's denial of approval hereunder does not require Bakery to purchase the Distribution Rights that were the subject of the proposed sale.
- (ii) All full or partial sales of the Distribution Rights are subject to Bakery having a right of first refusal to purchase the Distribution Rights intending to be sold by Distributor for the same price identified in the submitted Notice of Intent to Sell ("Right of First Refusal"). Bakery has 14 days following its receipt of a fully completed and signed Notice of Intent to Sell to notify Distributor that it is exercising its Right of First Refusal.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD pages 66–67)
What This Means (2025 FDD)
According to Bimbo Foods Bakeries Distribution's 2025 Franchise Disclosure Document, the sale of Distribution Rights is subject to several conditions. The distributor must first submit a written notice to Bimbo Foods Bakeries Distribution, using a form acceptable to them, indicating their intent to sell. This notice must be signed by both the distributor and the proposed buyer. Bimbo Foods Bakeries Distribution retains the right to approve the proposed buyer as an owner of the Distribution Rights.
Bimbo Foods Bakeries Distribution has 14 days to review the Notice of Intent to Sell, along with any additional information or paperwork they request from both the distributor and the proposed buyer. This 14-day period starts from the date of the notice, the receipt of all required information, or the date of a meeting with the proposed buyer (if Bimbo Foods Bakeries Distribution requests one), whichever is later. If Bimbo Foods Bakeries Distribution denies approval of the sale within this timeframe, the sale cannot proceed. However, if Bimbo Foods Bakeries Distribution fails to respond within the 14-day period and does not exercise its Right of First Refusal, the sale is considered approved.
Even if the sale is approved (or deemed approved), it must be finalized within 45 days. If the sale is not completed within this 45-day window, the approval may be voided by Bimbo Foods Bakeries Distribution, and the entire process (including the need for a new Notice of Intent to Sell) resets. Additionally, Bimbo Foods Bakeries Distribution has a Right of First Refusal, allowing them to purchase the Distribution Rights themselves at the same price offered by the proposed buyer. This right must be exercised within the same 14-day timeframe. The sale or transfer of shares or membership interest of Distributor that results in Guarantor no longer owning more than 50% of Distributor's outstanding stock or interest is deemed a transfer of the Distribution Rights that triggers the terms and conditions.