In Michigan, does Chicken Guy have a right of first refusal to purchase a franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
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 Franchise Disclosure Document, Item 17 addresses renewal, termination, transfer, and dispute resolution. Specifically, it clarifies that franchise agreements can include a provision granting Chicken Guy a right of first refusal to purchase a franchisee's assets. This right would be on the same terms and conditions as a legitimate third-party offer. Additionally, Chicken Guy can acquire a franchisee's assets at market or appraised value if the franchisee breaches the franchise agreement and fails to correct the breach.
For a prospective Chicken Guy franchisee in Michigan, this means that if they decide to sell their franchise, Chicken Guy may have the first opportunity to buy it. This right of first refusal ensures that Chicken Guy can maintain control over its brand and operations by potentially preventing the franchise from being sold to an undesirable buyer. The terms of the purchase would have to match those offered by a third party, ensuring a fair market value.
Furthermore, if a franchisee violates the franchise agreement and does not resolve the issue, Chicken Guy has the right to buy the franchise at its market or appraised value. This provision protects Chicken Guy's interests and ensures compliance with the franchise agreement. It's important for franchisees to understand these conditions, as they can impact their ability to sell or maintain their Chicken Guy franchise.