How must Devon Creek exercise its right of first refusal?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
16.6 Franchisor 's Right of First Refusal.
- 16.6.1 If Franchisee wishes to transfer all or part of its interest in the Franchised Business or this Agreement or if a Principal wishes to transfer any ownership interest in Franchisee, pursuant to any bona fide offer to purchase such interest, then Franchisee or such Principal shall promptly notify Franchisor in writing of each such offer, and shall provide such information and documentation relating to the offer as Franchisor may require.
- 16.6.2 Franchisor has the right, exercisable by written notice to Franchisee within ten (10)
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, if a franchisee or a principal of the franchisee wishes to transfer their interest in the franchised business or the agreement due to a legitimate offer, they must promptly inform Devon Creek in writing. This notification should include all information and documentation about the offer that Devon Creek requires.
Devon Creek then has the right to exercise its right of first refusal. To do so, Devon Creek must provide written notice to the franchisee within ten days of receiving the franchisee's notification.
This means that Devon Creek has a limited time frame to decide whether it wants to purchase the franchise interest on the same terms as the offer the franchisee has received. If Devon Creek does not provide written notice within the ten-day period, it effectively waives its right of first refusal, and the franchisee is free to proceed with the transfer to the original offeror.
This clause is important for prospective franchisees to understand because it outlines the process and timeline involved if they decide to sell their Devon Creek franchise. It ensures that Devon Creek has the first opportunity to buy the franchise back, which is a common practice in franchising to maintain control over the brand and its franchisees.