How long does Cinch I.T. have to match a bona fide offer for a Cinch I.T. franchisee's business?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| m. Conditions for franchisor approval of transfer | Section 28 | You must not be in default at time of transfer, you must sign a release, the proposed transferee must meet new franchisee qualifications, sign the then-current franchise agreement, pay training fee and complete training, and pay transfer fee. |
| n. Franchisor's right of first | Section 31 | We have 30 days to match |
| refusal to acquire franchisee's | bona fide offers for your | |
| business | business. | |
| o. Franchisor's option to purchase franchisee's business | Section 35 | If your Franchise Agreement is terminated, we may, but are not obligated to, buy your inventory, supplies and equipment. |
| p. Death or disability of franchisee | Section 29 | May transfer franchise to spouse, heirs or relatives if they are qualified. Otherwise, your estate has 6 months to transfer to a qualified buyer. |
| q. Non-competition covenants during the term of the franchise | Section 27 | No involvement with competing business is allowed anywhere in the United States (subject to state law). |
| r. Non-competition covenants after the franchise is terminated or expires | Sections 27 and 35 | Two year and 25 mile radius restriction on competing business. Permanent restriction on using licensed rights (subject to state law). |
| s. Modification of the Agreement | Section 50 | No modification generally unless agreed to in writing by both parties, but we may modify the System. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 48–56)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, Cinch I.T. has 30 days to match a bona fide offer that a franchisee receives for their business. This is described as the franchisor's right of first refusal.
This right of first refusal means that if a Cinch I.T. franchisee receives a legitimate offer from a third party to buy their franchise, they must first present that offer to Cinch I.T. The franchisor then has the option to purchase the franchise on the same terms as the third-party offer.
For a prospective franchisee, this clause could impact their exit strategy. While they are free to find a buyer for their franchise, Cinch I.T. ultimately has the final say on who becomes the next franchisee if they choose to exercise their right of first refusal. This is a fairly standard practice in franchising, allowing the franchisor to maintain control over their brand and the quality of their franchisees.