Can Chicken Guy exercise a right of first refusal to purchase a franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchisee 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 the franchisor the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy has the right of first refusal to purchase a franchise. This means that if a franchisee wants to sell their Chicken Guy franchise to a third party, they must first offer Chicken Guy the opportunity to purchase the franchise on the same terms and conditions as the third party's offer.
This right allows Chicken Guy to maintain control over who becomes a franchisee within their system. It ensures that Chicken Guy can prevent the franchise from being sold to someone who may not be a good fit for the brand or who may not meet Chicken Guy's standards. This can be beneficial for maintaining brand consistency and quality across all franchise locations.
However, the FDD also states that Chicken Guy has the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach. This provision protects Chicken Guy's interests in cases where a franchisee is not complying with the terms of the agreement. It's important for prospective franchisees to understand the conditions under which Chicken Guy can exercise these rights, as it can impact their ability to sell or continue operating their franchise.