In Michigan, does Cr3 American Exteriors have a right of first refusal to purchase a franchise?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
u receive and desire to accept a written and signed, bona fide offer to purchase or otherwise transfer this Agreement or any interest in it ("Third-Party Offer"), you will grant us the option (the "Right of First Refusal") to purchase the Franchise Business as provided in this Section, pursuant to the same terms and conditions contained in the Third-Party Offer.
B. Notice
Within fourteen (14) days of receipt of a Third-Party Offer, you will forward us a copy of the Third Party Offer and present us with the opportunity to exercise our Right of First Refusal.
C. Option
Upon receipt of the Third Party Offer from you, we will have the right to purchase the Franchise Business or interest in the Franchise Business for the price and upon the same terms and conditions that are contained in the Third-Party Offer. However, we may substitute cash for any non-cash form of payment proposed and we will have sixty (60) days after the exercise of our Right of First Refusal to close the said purchase.
D. Acceptance
If we exercise our Right of First Refusal, then we will notify you in writing within fifteen (15) days from our receipt of the Third-Party Offer from you.
E. Binding
Upon the giving of such notice by us, there will immediately arise between us and you, or your owners, a binding contract of purchase and sale at the price and upon the terms contained in the Third-Party Offer.
Source: Item 23 — RECEIPTS (FDD pages 53–150)
What This Means (2025 FDD)
According to the 2025 Cr3 American Exteriors FDD, Cr3 American Exteriors does have a right of first refusal. Specifically, if a franchisee receives an offer from a third party to purchase the franchise business or an interest in it, the franchisee must provide Cr3 American Exteriors with a copy of the offer within 14 days. This gives Cr3 American Exteriors the opportunity to purchase the franchise on the same terms as the third-party offer.
Cr3 American Exteriors has the option to substitute cash for any non-cash payment proposed in the third-party offer. After receiving the offer from the franchisee, Cr3 American Exteriors has 15 days to notify the franchisee in writing if they will exercise their right of first refusal. If Cr3 American Exteriors exercises this right, a binding contract of purchase and sale is immediately created between Cr3 American Exteriors and the franchisee based on the terms of the third-party offer.
If Cr3 American Exteriors does not exercise its right of first refusal within the 15-day period, the franchisee is then free to transfer the franchise business or ownership interest to the third party, provided that the franchisee satisfies the standard transfer conditions outlined in Section 7.2 of the agreement and completes the sale within 90 days of receiving the third-party offer. If the sale is not completed within this 90-day window, Cr3 American Exteriors's right of first refusal remains in effect.
This right of first refusal allows Cr3 American Exteriors to maintain control over who becomes a franchisee within their system. It ensures that Cr3 American Exteriors has the opportunity to buy back a franchise before it is sold to someone they have not approved. This is a fairly common practice in franchising, as it allows the franchisor to protect its brand and maintain consistent standards across its franchise network.