What interests are subject to the option or right of first refusal in the Floyds 99 franchise agreement?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
If Developer wishes to transfer its rights under this Agreement or any interest in it, or any part or portion of any business entity that owns it, or all or a substantial portion of the assets of any FLOYD'S 99 Shop developed pursuant to this Agreement, Developer agrees to grant to Franchisor a 90-day right of first refusal to purchase such rights, interest or assets on the same terms and conditions as are contained in the written offer to purchase submitted to Developer by the proposed purchaser; provided, however, the following additional terms and conditions shall apply:
Developer acknowledges that Franchisor's right to approve or disapprove of a proposed sale or transfer, and all other requirements and rights related to such proposed sale or transfer, as provided for above, shall apply (1) if Developer is a partnership or other business association, to the addition or deletion of a partner or members of the association or the transfer of any partnership or membership among existing partners or members; (2) if Developer is a corporation or limited liability company, to any proposed transfer or assignment of 25% or more of the ownership interests of Developer, whether such transfer occurs in a single transaction or several transactions; and (3) if Developer is an individual, to the transfer from such individual or individuals to a corporation or limited liability company controlled by them, in which case Franchisor's approval will be conditioned upon: (i) the continuing personal guarantee of the individual (or individuals) for the performance of obligations under this Agreement; (ii) the issuance and/or transfer of ownership interests which would affect a change in ownership of 25% or more of the stock or membership units in the company being conditioned on Franchisor's prior written approval; (iii) a limitation on the company's business activity to that of operating
as a Developer and operator of the FLOYD'S 99 Shops developed pursuant to this Agreement and related activities; and (iv) other reasonable conditions. With respect to a proposed transfer as described in subsection (1) and (3) of this Section, Franchisor's right of first refusal to purchase, as set forth above, shall not apply and Franchisor will waive any transfer fee chargeable to Developer for a transfer under these circumstances.
Source: Item 23 — RECEIPT (FDD pages 58–229)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, if a developer (franchisee) wishes to transfer their rights under the agreement, any interest in it, any part of a business entity that owns it, or a substantial portion of the assets of a Floyds 99 shop, they must grant Floyds 99 a 90-day right of first refusal. This means Floyds 99 has the first option to purchase these rights, interests, or assets on the same terms and conditions as a written offer from a proposed purchaser.
Floyds 99's right of first refusal also applies if the developer is a partnership or business association, to the addition or deletion of a partner, or if the developer is a corporation or LLC, to any transfer of 25% or more of the ownership interests. If the developer is an individual, the right applies to transfers to a corporation or LLC controlled by them. However, the right of first refusal does not apply to transfers within a partnership or to an individual transferring to a controlled entity, although other conditions and approvals still apply in those cases.
This right of first refusal allows Floyds 99 to maintain control over who becomes a franchisee and ensures that any transfer of ownership or assets aligns with their strategic interests. For a prospective franchisee, this means that selling the franchise or transferring a significant portion of the business requires giving Floyds 99 the first opportunity to buy it, potentially delaying or complicating a sale if Floyds 99 decides to exercise its right.