Can Extreme Art Studio require a franchisee in Michigan to resell items that are not uniquely identified with them?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- (h) A provision that requires you to resell to us items that are not uniquely identified with us.
This subdivision does not prohibit a provision that grants to us a right of first refusal to purchase the assets of a Franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants us the right to acquire the assets of a Franchise for the market or appraised value of such assets if you have breached the lawful provisions of the Franchise Agreement and have failed to cure the breach in the manner provided in subdivision (c).
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, Michigan law includes specific provisions to protect franchisees. One such provision directly addresses the resale of items to the franchisor.
Specifically, Extreme Art Studio cannot include a provision in its franchise agreement that requires a franchisee in Michigan to resell items to them that are not uniquely identified with Extreme Art Studio. This means Extreme Art Studio cannot force a Michigan franchisee to sell back generic, non-branded items.
However, there are exceptions to this rule. Extreme Art Studio retains the right of first refusal to purchase the assets of a franchise on the same terms as a legitimate third-party offer. Additionally, Extreme Art Studio can acquire the assets of a franchise at market or appraised value if the franchisee has breached the franchise agreement and failed to correct the breach.