Does Dog Haus have the right of first refusal to purchase the assets of a franchise?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
ger, stock redemption, consolidation, reorganization, recapitalization or other transfer of control of the Area Developer, however effected. Area Developer shall promptly provide Franchisor with written notice (stating such information as Franchisor may from time to time require) of each and every transfer, assignment and encumbrance by any Area Developer Owner of any direct or indirect Equity or voting rights in Area Developer, notwithstanding that the same may not constitute an "Assignment" as defined under this Article 9.
- 9.2.3 Neither Franchisor's right of first refusal nor the other conditions of Assignment shall apply to a transfer by Area Developer of all of Area Developer's rights under this Agreement to a newly-formed corporation, limited liability company or other business Entity provided all of the Equity or voting interests of the new business Entity are owned by the same Owners (a "Qualified Assignment"). Any attempted or purported Assignment which fails to comply with the requirements of this Article 9 shall be null and void and shall constitute a Default under this Agreement.
- 9.3. Right of First Refusal. Except with respect to a "Qualified Assignment", if Area Developer or an Owner receive a bona fide written offer ("Third Party Offer") from a third party (the "Proposed Buyer") to purchase or otherwise acquire any interest in Area Developer which will result in an Assignment within the meaning of this Agreement, Area Developer or the Proposed Buyer, shall, within five (5) days after receiving the Third Party Offer and before accepting it, apply to Franchisor in writing for Franchisor's consent to the proposed Assignment. To constitute a bona fide written offer, the Third Party Offer must also apply to all of the Dog Haus Restaurants then owned and operated by Area Developer in the Development Area.
- Area Developer, or the Proposed Buyer, shall attach to its application for consent to complete the transfer a copy of the Third Party Offer together with (i) information relating to the proposed transferee's experience and qualifications; (ii) a copy of the proposed transferee's current financial statement; and (iii) any other information material to the Third Party Offer, proposed transferee and proposed assignment or that Franchisor requests.
- 9.3.2 Franchisor or its nominee shall have the right, exercisable by written notice ("Purchase Notice") given to Area Developer or the Proposed Buyer, within thirty (30) days following receipt of the Third Party Offer, all supporting information, and the application for consent, to notify Area Developer or the Proposed Buyer that it will purchase or acquire the rights, assets, equity or interests proposed to be assigned on the same terms and conditions set forth in the Third Party Offer, except that Franchisor may (i) substitute cash for any form of payment proposed in the offer discounted to present value based upon the rate of interest stated in the Third Party Offer; and (ii) deduct
from the purchase price the amount of all amounts then due and owing from Area Developer to Franchisor under this Agreement or otherwise.
- If Franchisor or its nominee elects to purchase or acquire the rights, assets, equity or interests proposed to be assigned to the Proposed Buyer, the closing shall take no later than sixty (60) days following the date that the Purchase Notice was issued by Franchisor.
- 9.3.4 If Franchisor does not elect to purchase or acquire the rights, assets, equity or interests proposed to be assigned to the Proposed Buyer, the closing of the sale to the Proposed Buyer shall take no later than ninety (90) days following the date that the Third Party Offer was received by Area Developer.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, Dog Haus does have the right of first refusal if an Area Developer receives a legitimate offer from a third party to purchase any interest in the Area Developer that would result in an assignment. Before accepting the offer, the Area Developer must apply in writing to Dog Haus for consent to the proposed assignment within five days of receiving the offer. The third-party offer must apply to all Dog Haus restaurants owned and operated by the Area Developer in the Development Area.
The Area Developer or the proposed buyer must include a copy of the third-party offer with their application, along with information about the proposed transferee's experience, qualifications, and current financial statement, as well as any other relevant information that Dog Haus requests. Dog Haus has the right to purchase the assets on the same terms as the third-party offer by providing written notice within 30 days of receiving the offer, all supporting information, and the application for consent. Dog Haus can substitute cash for any form of payment proposed in the offer, discounted to present value based on the interest rate in the third-party offer, and deduct any amounts owed by the Area Developer to Dog Haus from the purchase price.
If Dog Haus chooses to exercise its right of first refusal, the closing must occur no later than 60 days after Dog Haus issues the Purchase Notice. If Dog Haus does not exercise its right, the sale to the Proposed Buyer must close within 90 days of Dog Haus receiving the Third Party Offer. If there are any material changes to the terms of the Third Party Offer before the closing, Dog Haus retains the right of first refusal to accept the new terms. To get Dog Haus's consent, the Proposed Buyer must meet the current qualifications for new Dog Haus Area Developers and the Area Developer must be in good standing when consent is requested and until the closing date of the Assignment.
This right of first refusal does not apply to a transfer by Area Developer of all of Area Developer's rights under this Agreement to a newly-formed corporation, limited liability company or other business Entity provided all of the Equity or voting interests of the new business Entity are owned by the same Owners (a "Qualified Assignment").