Does CB Franchising have a right of first refusal before a Chocolate Bash franchisee engages in a 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 does have a right of first refusal before a franchisee engages in a transfer, with some exceptions. Before a Chocolate Bash franchisee (or any owner) engages in a transfer, CB Franchising has the right to review the terms of the proposed transfer.
Specifically, the franchisee must provide CB Franchising with a copy of the terms and conditions of any transfer. CB Franchising then has 30 days from the date they receive the copy to exercise their right to purchase the assets subject to the proposed transfer. This purchase would be for the same price and under the same terms and conditions as the proposed transfer, although Chocolate Bash can substitute cash for any other form of payment.
However, there are exceptions where CB Franchising's right of first refusal does not apply. These exceptions include transfers under Section 15.3, which involves transfers to an entity wholly owned by the franchisee under specific conditions, or transfers to a spouse, sibling, or child of an owner. If Chocolate Bash chooses not to exercise its right of first refusal within the 30-day period, the franchisee is then free to proceed with the transfer, provided they comply with all other terms and conditions outlined in the franchise agreement.