Does Extreme Art Studio have a right of first refusal to purchase the assets of a franchise in Michigan?

According to the 2024 Extreme Art Studio Franchise Disclosure Document, Extreme Art Studio does have a right of first refusal to purchase the assets of a franchise in Michigan. This right allows Extreme Art Studio to purchase the assets of a franchise on the same terms and conditions as a bona fide third party who is willing and able to purchase those assets. Additionally, Extreme Art Studio has the right to acquire the assets of a franchise for the market or appraised value if the franchisee has breached the lawful provisions of the Franchise Agreement and failed to cure the breach as specified in the agreement.

This provision is permitted under Michigan law, which states that a franchisor is allowed to have a right of first refusal to purchase the assets of a franchise. This right does not violate the general restrictions against requiring a franchisee to resell items that are not uniquely identified with the franchisor.

For a prospective franchisee, this means that if they decide to sell their Extreme Art Studio franchise in Michigan, they must first offer Extreme Art Studio the opportunity to buy the assets on the same terms offered by a third-party buyer. This could potentially delay or complicate the sale process, as the franchisee must wait for Extreme Art Studio to decide whether to exercise its right of first refusal. However, it also ensures that the franchisee will receive fair market value for their assets, as the terms must match those offered by an independent buyer.