Does the right of first refusal apply to subsequent transfers of a Counselor Realty franchise?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
9.6 Right of First Refusal. If you (or any subsequent Franchisee) propose a transfer governed by this Article 9, in whole or in part, to any third party in response to a bona fide offer from such third party, you shall first offer to sell to Counselor your said interest as provided herein. You shall obtain from the third party offeror and deliver to us a statement in writing, signed by the offeror and by you of all of the terms of the offer. Counselor has 30 days from its receipt of the statement to accept the offer by delivering written notice of acceptance to you. The acceptance shall be on the same price and terms stated in the third party offer except that Counselor may confer with you and the proposed transferee and negotiate the terms of the proposed transfer without thereby impairing the right of first refusal, and Counselor may substitute cash in the fair market value of any non-cash consideration offered by the third party. If Counselor fails to accept the offer within the 30-day period, you shall be free for 60 days after such period to effect the disposition described in the statement delivered to Counselor provided that such transfer is in accordance with Article 9 of this Agreement; but you shall effect no other or subsequent sale or assignment of this Agreement or the business conducted hereunder without first offering the same to Counselor in accordance with this paragraph.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to the 2025 Counselor Realty Franchise Disclosure Document, the right of first refusal does apply to subsequent transfers of a Counselor Realty franchise. If a franchisee (or any subsequent franchisee) proposes to transfer their interest to a third party based on a bona fide offer, they must first offer to sell their interest to Counselor Realty.
The franchisee must obtain a written statement from the third-party offeror, signed by both the offeror and the franchisee, detailing all terms of the offer and deliver it to Counselor Realty. Counselor Realty then has 30 days to accept the offer by providing written notice of acceptance to the franchisee. The acceptance must be on the same price and terms as the third-party offer; however, Counselor Realty may negotiate the terms with the franchisee and proposed transferee without affecting their right of first refusal and may substitute cash for the fair market value of any non-cash consideration offered by the third party.
If Counselor Realty does not accept the offer within the 30-day period, the franchisee is free to proceed with the transfer to the third party within 60 days, provided the transfer complies with Article 9 of the Franchise Agreement. However, the franchisee cannot make any other or subsequent sale or assignment of the agreement or business without first offering it to Counselor Realty again, following the same procedure. This ensures that Counselor Realty retains control over who becomes a franchisee within their system.