Does Care Plus Medical Ucc have a right of first refusal to purchase the assets of a franchise?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:
- (i) The failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
- (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
- (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Care Plus Medical Ucc Franchise Disclosure Document, Care Plus Medical Ucc retains the right of first refusal to purchase the assets of a franchise. This means that if a franchisee decides to sell their Care Plus Medical Ucc business, they must first offer Care Plus Medical Ucc the opportunity to buy it on the same terms as any legitimate third-party offer.
This right does not prevent Care Plus Medical Ucc from exercising its right of first refusal to purchase the franchise. However, Care Plus Medical Ucc can refuse a transfer for good cause, including if the proposed buyer doesn't meet Care Plus Medical Ucc's standards, is a competitor, won't comply with obligations, or if there are outstanding payments or defaults.
This is a fairly standard clause in franchise agreements, allowing Care Plus Medical Ucc to maintain control over who enters the system and to ensure brand consistency. It also allows Care Plus Medical Ucc to acquire successful locations or prevent them from falling into the hands of competitors. For a prospective franchisee, this means they may have a more limited pool of potential buyers if they decide to sell, but it also provides a degree of security knowing that Care Plus Medical Ucc has a vested interest in the success and stability of the franchise system.