How does CB Franchising exercise its right of first refusal for a Chocolate Bash franchise transfer?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.5 CB Franchising's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3 or to a spouse, sibling, or child of an Owner), CB Franchising will have a right of first refusal, as set forth in this Section. Franchisee (or its Owners) shall provide to CB Franchising a copy of the terms and conditions of any Transfer. For a period of 30 days from the date of CB Franchising's receipt of such copy, CB Franchising will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions (except that CB Franchising may substitute cash for any other form of payment). If CB Franchising does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, CB Franchising has a right of first refusal before a franchisee can engage in a transfer of their franchise, with some exceptions. This means that before a franchisee can sell their Chocolate Bash business to a third party, they must first offer CB Franchising the opportunity to purchase it on the same terms. This right does not apply to transfers under Section 15.3 or to a spouse, sibling, or child of an Owner.
To exercise this right, the franchisee must provide CB Franchising with a copy of the terms and conditions of any proposed transfer. CB Franchising then has 30 days from the date they receive this copy to decide whether to exercise their right of first refusal. If CB Franchising chooses to exercise this right, they must notify the franchisee and can purchase the assets subject to the proposed transfer for the same price and on the same terms and conditions, with the option to substitute cash for any other form of payment.
If Chocolate Bash does not exercise its right of first refusal within the 30-day period, the franchisee is then free to proceed with the transfer to the third party, subject to all other terms and conditions outlined in the franchise agreement. This provision allows Chocolate Bash to maintain control over who becomes a franchisee and ensures that any new franchisee meets their standards and qualifications.