Under what conditions can Dq Treat substitute equivalent cash for noncash consideration when exercising its right of first refusal?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Acceptance and Closing. Company has 30 days from Company's receipt of the statement setting forth the third-party offer and such other information requested by Company, or the appraiser's report to accept the offer by delivering written notice of acceptance to Licensee.
Company's acceptance will be on the same price and terms set forth in the statement except that Company may substitute equivalent cash for any noncash consideration and the terms will include the customary representations and warranties as to ownership, condition of and title to assets, loans and encumbrances on the assets, validity of contracts and agreements and contingent and other liabilities afforded the assets.
Company has 30 days after accepting the offer to close on the sale.
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, when Dq Treat exercises its right of first refusal to purchase a franchise, it can modify the terms of the offer. Specifically, Dq Treat can substitute equivalent cash for any noncash consideration that was part of the original offer made to the franchisee by a third party.
This provision ensures that Dq Treat has the flexibility to match the economic value of the offer in a way that is most convenient for them. For example, if the original offer included a combination of cash and stock, Dq Treat could choose to offer the entire purchase price in cash. This substitution is allowed to ensure a smooth transaction while still honoring the original intent of the offer.
Furthermore, the terms of Dq Treat's acceptance will include customary representations and warranties regarding ownership, the condition of and title to assets, loans and encumbrances on the assets, the validity of contracts and agreements, and contingent and other liabilities tied to the assets. After Dq Treat accepts the offer, it has 30 days to close the sale.