What is the role of Counselor Realty's right of first refusal in a franchise transfer?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
the requirements of this Agreement and then-current System standards.
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.
10. RESOLUTION OF DISPUTES.
- 10.1 Arbitration. Except as provided below, any dispute arising under or in relation to this Agreement shall be resolved by binding arbitration by the National Center for Dispute Settlement, under its rules for expedited commercial arbitration, in Minneapolis, Minnesota. Each claim or controversy will be arbitrated by Franchisee on an individual basis, and will not be consolidated in any arbitration action with the claim of any other franchisee. The award of the arbitrators is final and binding on all parties. The arbitrators may issue appropriate orders as well as award monetary (but not exemplary or punitive) damages. The prevailing party will be entitled to recover its costs including its reasonable attorneys' fees. We may sue to collect money owed to us, to protect or enforce our rights in the Marks, or to compel inspections or audits.
- 10.2 Injunctive Relief. Your breach of this Agreement could cause irreparable damage to Counselor or to other franchisees. Therefore, upon a breach or threatened breach of any of the terms of this Agreement, we are entitled to an immediate injunction restraining such breach and/or a decree of specific performance, pending arbitration or adjudication, without bond, or having to show or prove any actual damage, and without regard to the availability of an adequate remedy at law.
11. TERMINATION.
- (a) We may terminate for good cause if you perform any intentional, material, repeated or continuous breach of this Agreement. We must provide you with 60 days' written notice of termination, specifying the cause for termination. Except as provided below, you shall have 30 days from delivery of notice to cure the breach (except in the case of non-payment of sums due, in which case you shall have seven days to cure the breach). If you fail to do so this Agreement shall terminate on expiration of the 60-day notice period.
- (b) This Agreement shall terminate immediately upon delivery of notice to you if: (i) you misrepresent or omit material information on your application; or (ii) you fail to locate a suitable site or open the Office for business within the time required under section 1.2 of this Agreement; or (iii) you become insolvent or bankrupt; or (iv) you transfer or attempt to transfer this Agreement without our consent; or (v) you abandon this Agreement, the Office or the Business;
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, the company holds a right of first refusal if a franchisee intends to transfer their franchise. This means that before a franchisee can sell their franchise to a third party, they must first offer Counselor Realty the opportunity to purchase it on the same terms. This right applies to transfers of the franchise agreement itself, the physical office, any additional or extension offices, the business assets, or ownership interests in the franchisee entity.
To initiate the transfer process, the franchisee must obtain a written offer from the third party and provide Counselor Realty with a statement containing all the terms of the offer, signed by both the franchisee and the potential buyer. Counselor Realty then has 30 days to accept the offer in writing. Counselor Realty can negotiate the terms without losing their right of first refusal and may substitute cash for any non-cash consideration in the offer.
If Counselor Realty declines to 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, provided the transfer occurs within 60 days and adheres to the franchise agreement's transfer conditions. The franchisee must offer the same terms to Counselor Realty for any subsequent transfer attempts. There are some exceptions where Counselor Realty's right of first refusal does not apply, specifically in cases of certain ownership interest transfers that do not result in a change of control of the franchisee, provided Counselor Realty receives prior written notice and the transferee executes a guaranty agreement.