In Michigan, can C3 Wellness Spa exercise a right of first refusal to purchase a C3 Wellness Spa franchise?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
A provision that requires you to resell to us items that are not uniquely identified with us.
This subdivision does not prohibit a provision that grants us a right of first refusal to purchase the assets of
- a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants us the right to acquire the assets of a franchise for the market or appraised value and has failed to cure the breach in the manner provided in Item 17(g).
MICHIGAN FDD ADDENDUM
Amendments to the C3 Wellness Franchise Disclosure Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS.
IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
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, C3 Wellness Spa can have a right of first refusal to purchase a franchise in Michigan. The Michigan FDD Addendum addresses unfair provisions that are sometimes in franchise documents. It states that no provision prohibits C3 Wellness Spa from having a right of first refusal to purchase the assets of a franchise on the same terms as a third party, or to acquire the assets for market or appraised value if the franchisee has failed to cure a breach.
Specifically, if a C3 Wellness Spa franchisee or owner wants to transfer their franchise, spa, spa facility, or spa location, they must get a written offer from a potential buyer and give a copy to C3 Wellness Spa. Then, C3 Wellness Spa has 30 days to decide if they want to buy the interest for the same price and terms, although they can pay in cash even if the offer proposes a different payment method.
If C3 Wellness Spa decides to purchase the interest, the franchisee or owner must sell it to them, and C3 Wellness Spa will have at least 60 more days to prepare for the closing. C3 Wellness Spa is also entitled to customary representations and warranties from the seller. However, if C3 Wellness Spa doesn't exercise its right of first refusal, the franchisee or owner can proceed with the transfer to the original buyer, as long as they comply with all other terms of the agreement. If the sale isn't completed within 120 days or if the terms change significantly, C3 Wellness Spa gets another right of first refusal.