Does Crave have a right of first refusal to acquire a multi-unit developer's Crave 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 retains the right of first refusal to acquire a multi-unit developer's business. This means that if a multi-unit developer decides to sell their Crave business, they must first offer Crave the opportunity to purchase it on the same terms as any other potential buyer.
This right of first refusal gives Crave significant control over who becomes a multi-unit developer within their franchise system. It allows Crave to ensure that any new multi-unit developer meets their standards and is a good fit for the brand. It also provides Crave with an opportunity to expand its corporate ownership by acquiring successful multi-unit operations.
For a prospective Crave multi-unit developer, this clause means that selling the business may require extra steps. While the developer can find a buyer and negotiate terms, Crave has the ultimate say in whether the sale goes through. Crave can simply match the offer and take ownership of the business, potentially disrupting the developer's plans. The FDD does not specify how long Crave has to match the offer.
This is a fairly standard provision in franchise agreements, designed to protect the franchisor's brand and maintain control over the franchise system. However, it's crucial for multi-unit developers to understand this right and factor it into their long-term business plans, especially when considering a potential sale or transfer of their Crave business.