Is there a fee associated with Counselor Realty exercising its right of first refusal?
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 Counselor Realty's 2025 Franchise Disclosure Document, if a franchisee proposes to transfer their interest to a third party, they must first offer to sell it to Counselor Realty. Counselor Realty has 30 days to accept the offer at the same price and terms as the third party's offer. The document specifies the process for Counselor Realty to exercise its right of first refusal, including the franchisee's obligation to provide a written statement of the offer's terms.
The Franchise Disclosure Document does not explicitly state that there is a fee associated with Counselor Realty exercising its right of first refusal. The terms of 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.
However, it is important to note that the franchisee may incur costs related to obtaining the third-party offer and providing the required documentation to Counselor Realty. Additionally, if Counselor Realty declines to exercise its right of first refusal, the franchisee is free to proceed with the transfer to the third party, provided that the transfer is completed within 60 days and complies with the terms of the franchise agreement. Prospective franchisees should clarify with Counselor Realty whether any fees or expenses are associated with the right of first refusal beyond those explicitly mentioned in the FDD.