Does Crawl Space Ninja have a right of first refusal regarding franchisee transfers?
Crawl_Space_Ninja Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee's rights and duties under this Agreement are personal to Franchisee as it is organized and with the Principals of the business as they exist on the date of execution of this Agreement, and Franchisor has made this Agreement with Franchisee in reliance on Franchisor's perceptions of the individual and collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee.
Thus, no transfer, as hereafter defined, may be made without Franchisor's prior written approval.
Franchisor may void any transfer made without such approval.
- 16.3.
Transfers by Franchisee.
Franchisee shall not directly or indirectly sell, assign, transfer, give, devise, convey or encumber this Agreement or any right or interest herein or hereunder (a "Transfer"), the Franchise, the Franchised Business or any assets thereof (except in the ordinary course of business) or suffer or permit any such assignment, transfer, or encumbrance to occur by operation of law unless it first obtains the written consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
Based on the 2024 Crawl Space Ninja Franchise Disclosure Document, franchisees cannot transfer their rights or duties under the agreement without prior written approval from Crawl Space Ninja. Crawl Space Ninja may also void any transfer made without their approval. The agreement is personal to the franchisee and relies on Crawl Space Ninja's perception of the franchisee's character, skills, aptitude, business ability, and financial capacity.
Specifically, franchisees cannot directly or indirectly sell, assign, transfer, give, devise, convey, or encumber the agreement, the franchise, the franchised business, or any assets thereof without first obtaining written consent from Crawl Space Ninja. This restriction applies to any transfer, assignment, or encumbrance that may occur by operation of law.
While the FDD states that transfers are restricted and require franchisor approval, it does not explicitly state that Crawl Space Ninja has a right of first refusal. A right of first refusal would give Crawl Space Ninja the option to purchase the franchise on the same terms as a bona fide offer from a third party. Prospective franchisees should clarify with Crawl Space Ninja whether they retain this right.