Does Extreme Art Studio have the right to assign its right of first refusal to a third party?

According to the 2024 Extreme Art Studio Franchise Disclosure Document, Extreme Art Studio has the right to waive its right of first refusal. An excerpt from Exhibit H-5, Sample Approval of Requested Assignment, details a situation where Extreme Art Studio Franchising, LLC ("Franchisor") waives its right of first refusal set forth in the Former Franchise Agreement. This waiver is specifically in the context of approving a Requested Assignment of the Franchised Business from a Former Franchisee to a New Franchisee. The document outlines that the waiver is contingent upon receipt of the Franchisor's Assignment Fee from the Former Franchisee and the mutual execution of the agreement by all parties.

This clause indicates that Extreme Art Studio can choose not to exercise its right to step in and take over a franchise location when the franchisee wants to sell. Instead, Extreme Art Studio can allow the transfer to proceed to a new franchisee. This decision is made in consideration of a transfer fee paid by the former franchisee and the execution of the assignment agreement.

For a prospective franchisee, this means that while Extreme Art Studio typically has the first option to buy back a franchise, they can forgo this right and allow a sale to a third party. However, the FDD does not explicitly state whether Extreme Art Studio can assign this right of first refusal to another third party. It only addresses the scenario where Extreme Art Studio waives its right, allowing the assignment to proceed to a specific new franchisee. To fully understand if Extreme Art Studio can assign its right of first refusal to another third party, a prospective franchisee should seek clarification from the franchisor.