Does Crave have a right of first refusal to acquire a Crave multi-unit developer's business?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Multi- | Summary | |
|---|---|---|---|
| Unit Development Agreement | |||
| h. “Cause” defined – non- curable defaults | 9 | Failure to meet your minimum performance schedule; failure to comply with applicable laws; if all of your Franchised Businesses stop operating; unauthorized transfer; you make a material misrepresentation to us; conviction by you or your owners of an indictable offense; bankruptcy or insolvency; if a Franchise Agreement with us is terminated according to its terms (this is a cross-default provision) | |
| i. Multi-unit developer’s | 10 | You must stop selecting sites for Franchised | |
| obligations on termination/ | Businesses, and you may not open any more | ||
| non-renewal | Franchised Businesses | ||
| j. Assignment of contract by franchisor | 11 | No restriction on our right to assign. However, no assignment will be made except to an assignee who, in our good faith judgment, is willing and able to assume our obligations under the Multi-Unit Development Agreement. | |
| k. “Transfer” by multi-unit | 11 | Includes transfer of any interest in the Multi- | |
| developer – defined | Unit Development Agreement | ||
| l. Franchisor approval of transfer by multi-unit developer | 11 | We have the right to approve all transfers, our consent not to be unreasonably withheld | |
| m. Conditions for franchisor approval of transfer | 11 | Conditions for transfer include not being in default, at least 25% of all Franchised Businesses required to be developed are open or under construction, all debts are paid, the buyer meets our current criteria for new Multi- Unit Developers, execution of a general release, payment of transfer fee, buyer personally guarantees all obligations | |
| n. Franchisor’s right of first | 11 | We have the right to match the offer. | |
| refusal to acquire multi- | |||
| unit developer’s business |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 50–56)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave does have a right of first refusal to acquire a multi-unit developer's business. Specifically, if a multi-unit developer decides to sell their business, Crave has the right to match any offer made by a potential buyer.
This right of first refusal is a significant consideration for prospective multi-unit developers. It means that before a developer can sell their business to a third party, they must first offer Crave the opportunity to purchase it on the same terms. This gives Crave control over who enters the system as a multi-unit developer and ensures that any new developer meets their standards.
For the multi-unit developer, this could potentially limit the pool of potential buyers and possibly the sale price, as any prospective buyer knows that Crave has the option to step in and acquire the business themselves. However, it also provides a clear exit strategy, as Crave is always a potential buyer if the terms are right. It is important for prospective multi-unit developers to fully understand the implications of this right of first refusal before entering into an agreement with Crave.