Does City Publications have a right of first refusal to purchase the assets of a franchise in Michigan?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR THE STATE OF MICHIGAN
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- THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
- ◼ A prohibition of the right of Franchisee to join an association of franchisees.
- ◼ A requirement that a Franchisee assent to a release, assignment, novation, waiver or estoppel which deprives a Franchisee of rights and protections provided under Michigan law. This shall not preclude a Franchisee, after entering into a Franchise Agreement, from settling any and all claims.
- ◼ A provision that permits a Franchisor to terminate a franchise prior to the expiration of this term except for good cause. Good cause shall include the failure of the Franchisee to comply with any lawful provision of the Franchise Agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- ◼ A provision that permits a Franchisor to refuse to renew a franchise without fairly compensating the Franchisee by repurchase or other means for the fair market value at the time of expiration of the Franchisee's inventory, supplies, equipment, fixtures and furnishings. Personalized
materials which have no value to the Franchisor and inventory, supplies, equipment, fixtures and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (a) the term of the franchise is less than 5 years, and (b) the Franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising or other commercial symbol in the same area subsequent to the expiration of the franchise or the Franchisee does not receive at least 6 months advance notice of Franchisor's intent not to renew the franchise.
- ◼ A provision that permits the Franchisor to refuse to renew a franchise on terms generally available to other Franchisees of the same class or type under similar circumstances.
This section does not require a renewal provision.
- ◼ A provision requiring that arbitration or litigation be conducted outside this state.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, there is no mention of City Publications having a right of first refusal to purchase the assets of a franchise in Michigan. However, the FDD does include an addendum specific to Michigan that addresses certain unfair provisions that are sometimes included in franchise documents. These provisions, if present, are void and cannot be enforced against the franchisee. These include prohibitions on joining franchisee associations, requirements to waive rights under Michigan law, termination without good cause, failure to fairly compensate for inventory upon non-renewal (under specific conditions), refusal to renew on generally available terms, and requirements for out-of-state arbitration or litigation.
While the Michigan addendum doesn't directly grant City Publications a right of first refusal, it does outline several protections for franchisees operating in Michigan. These protections ensure that franchisees are not subjected to unfair or overly restrictive terms within the franchise agreement. The addendum aims to balance the relationship between City Publications and its franchisees by preventing the enforcement of certain clauses that could be detrimental to the franchisee's rights and interests.
Prospective franchisees in Michigan should carefully review the Michigan addendum and understand their rights under Michigan law. It is important to note that the absence of a right of first refusal for City Publications does not preclude other terms or conditions related to the transfer or sale of the franchise. Franchisees should seek legal counsel to fully understand the implications of the franchise agreement and any related addenda, ensuring they are aware of all their rights and obligations.