What are the implications of Article 14.F on the transfer of a C3 Wellness Spa franchise?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
14.F. FRANCHISOR'S RIGHT OF FIRST REFUSAL
If Franchisee or an Owner desires to engage, in whole or in part, in a Transfer of Franchisee, this Agreement, Franchisee's Spa, Franchisee's Spa Facility, and/or Franchisee's Spa Location, then Franchisee or such Owner (as applicable) must obtain a bona fide, signed written offer from the fully disclosed purchaser (the "Offer") and submit an exact copy of the Offer to Franchisor. Franchisor shall have 30 days after receipt of the Offer to decide whether Franchisor will purchase the interest in Franchisee, Franchisee's Spa, Franchisee's Spa Facility, and/or Franchisee's Spa Location for the same price and upon the same terms contained in the Offer (however, Franchisor may substitute cash for any form of payment proposed in the Offer). If Franchisor notifies Franchisee that Franchisor intends to purchase the interest within said 30 day period, Franchisee or Owner (as applicable) must sell the interest to Franchisor. Franchisor will have at least an additional 60 days to prepare for closing. Franchisor shall be entitled to receive from Franchisee or Owner, as applicable, all customary representations and warranties given by Franchisee or Owner, as applicable, as the seller of the assets and/or the ownership interest or, at Franchisor's election, the representations and warranties contained in the offer. If Franchisor does not exercise its right of first refusal, Franchisee or Owner, as applicable, may complete the Transfer to the purchaser pursuant to and in accordance with the terms of the Offer, provided that separate and apart from this Article 14.F right of first refusal, Franchisee complies with the terms of this Article 14. However, if the sale to the purchaser is not completed within 120 days after delivery of the Offer to Franchisor, or there is a material change in the terms of the sale, Franchisor will again have the right of first refusal specified in this Article 14.F. Franchisor's right of first refusal in this Article 14.F shall not apply to any Transfer pursuant to Article 14.E of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, Article 14.F, titled "Franchisor's Right of First Refusal," outlines the process if a franchisee wishes to transfer their franchise. If a franchisee or owner desires to engage in a transfer of the franchise, agreement, spa, spa facility, or spa location, they must first obtain a bona fide, signed written offer from a fully disclosed purchaser. A copy of this offer must then be submitted to C3 Wellness Spa.
C3 Wellness Spa then has 30 days to decide whether it will purchase the franchisee's interest for the same price and terms as in the offer. C3 Wellness Spa can substitute cash for any proposed form of payment. If C3 Wellness Spa decides to purchase the interest, the franchisee or owner must sell to them, and C3 Wellness Spa will have at least an additional 60 days to prepare for closing. C3 Wellness Spa is entitled to customary representations and warranties from the seller or the representations and warranties in the offer, at their election.
If C3 Wellness Spa does not exercise its right of first refusal, the franchisee or owner may complete the transfer to the purchaser according to the offer's terms, provided they comply with the other terms in Article 14. However, if the sale is not completed within 120 days after the offer was delivered to C3 Wellness Spa, or if there is a material change in the terms of the sale, C3 Wellness Spa will again have the right of first refusal. This right of first refusal does not apply to transfers made under Article 14.E of the agreement.