Under what circumstances does Desi District Franchise Group have a right of first refusal for a transfer?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.5 Desi District Franchise Group's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3, to a co-Owner, or to a spouse, sibling, or child of an Owner), Desi District Franchise Group will have a right of first refusal, as set forth in this Section.
Franchisee (or its Owners) shall provide to Desi District Franchise Group a copy of the terms and conditions of any Transfer.
For a period of 30 days from the date of Desi District Franchise Group's receipt of such copy, Desi District Franchise Group will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions (except that Desi District Franchise Group may substitute cash for any other form of payment).
If Desi District Franchise Group does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District Franchise Group has a right of first refusal before a franchisee engages in a transfer of their franchise. This right applies to almost all transfer scenarios, with a few specific exceptions.
The right of first refusal does not apply in the event of a transfer under Section 15.3, which pertains to transfers for convenience of ownership, such as to a corporation or limited liability company. It also does not apply to transfers to a co-owner, or to a spouse, sibling, or child of an owner.
If Desi District decides to exercise its right of first refusal, the company has the right to purchase the assets of the franchise under the same terms and conditions as the proposed transfer, but Desi District can substitute cash for any other form of payment. The franchisee must provide Desi District Franchise Group with a copy of the terms and conditions of any proposed transfer, and Desi District then has 30 days from the date of receipt to exercise its right of first refusal by providing notice to the franchisee. If Desi District does not exercise this right within the 30-day period, the franchisee may proceed with the transfer, provided they meet all other requirements outlined in the franchise agreement.