What are the requirements for Brightstar Care to exercise its right of first refusal to acquire a franchisee's business?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The following language is added to the Franchise Agreement as new Section 14.3:
Upon our termination of this Agreement in compliance with its terms, your termination of this Agreement without cause in breach of this Agreement, or expiration of this Agreement (if we offer you the right to renew the franchise for the Franchised Business but you choose not to renew), we have the right (but no obligation), exercisable by giving you written notice before or within thirty (30) days after the effective date of termination or expiration, to purchase the Agency's business and related goodwill (other than any goodwill we already own). We have the unrestricted right to assign this purchase option to a third party (including an affiliate), which then will have the rights and obligations described in this Section 14.3. We (or our designee) are entitled to all customary representations, warranties, and indemnities in our purchase, including representations and warranties regarding ownership and condition of, and title to, assets; liens and encumbrances on assets; validity of contracts and liabilities affecting the assets, contingent or otherwise; and indemnities for all actions, events, and conditions that existed or occurred in connection with the Agency before the closing of the purchase. You also agree (at our option) to assign to us (or our designee) the lease for the Agency's premises or to enter into a sublease for the remainder of the lease term on the same terms (including renewal options) as the lease.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 81–92)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the franchisor has the right to purchase the franchisee's agency business under specific conditions, particularly in California. Brightstar Care can exercise this right upon the termination of the Franchise Agreement, whether initiated by Brightstar Care in compliance with the agreement's terms, by the franchisee without cause in breach of the agreement, or upon the agreement's expiration if the franchisee chooses not to renew despite being offered the opportunity.
To exercise this right, Brightstar Care must provide written notice to the franchisee before or within thirty days after the termination or expiration date. Brightstar Care also has the right to assign this purchase option to a third party, including an affiliate, who will then assume the associated rights and obligations. As part of the purchase, Brightstar Care (or its designee) is entitled to customary representations, warranties, and indemnities, including those related to asset ownership, condition, title, liens, encumbrances, contract validity, and liabilities. These also include indemnities for actions, events, and conditions that occurred before the purchase.
Furthermore, Brightstar Care has the option to require the franchisee to assign the agency's premises lease or enter into a sublease for the remainder of the lease term under the same terms, including renewal options. This ensures Brightstar Care can maintain the agency's location and operational continuity. These conditions are specifically outlined in an addendum to the Franchise Agreement for franchisees in California, indicating that these terms may vary depending on the franchisee's location and governing state laws.