If a Chicken Guy franchisee wants to sell their business, does Chicken Guy have a right of first refusal?
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 the 2025 Chicken Guy FDD, the franchise agreement does not prohibit a provision that grants Chicken Guy a right of first refusal to purchase the assets of a franchisee. This would be under the same terms and conditions as a bona fide third party willing and able to purchase those assets. Chicken Guy also has the right to acquire the assets at market or appraised value if the franchisee has breached the franchise agreement and failed to cure the breach.
This means that if a Chicken Guy franchisee decides to sell their restaurant, Chicken Guy may have the first opportunity to buy it, matching any offer made by another potential buyer. This right of first refusal is a common practice in franchising, allowing the franchisor to maintain control over the brand and ensure that new owners meet their standards.
For a prospective franchisee, this implies that selling the business may involve an extra step of offering it to Chicken Guy before finalizing a sale with another party. It's important to understand the specific conditions and terms related to this right of first refusal, as it could impact the franchisee's ability to sell to their preferred buyer or at their desired price. The franchisee should review the franchise agreement carefully and discuss this provision with Chicken Guy to fully understand its implications.