Under what circumstances does Fly To Fit Franchise have a right of first refusal?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.5 Fly To Fit Franchise's Right of First Refusal. Before Franchisee (or any Owner) engages in a Transfer (except under Section 15.3, to a co-Owner, or to a spouse, sibling, or child of an Owner), Fly To Fit Franchise will have a right of first refusal, as set forth in this Section.
Franchisee (or its Owners) shall provide to Fly To Fit Franchise a copy of the terms and conditions of any Transfer.
For a period of 30 days from the date of Fly To Fit Franchise's receipt of such copy, Fly To Fit Franchise will have the right, exercisable by notice to Franchisee, to purchase the assets subject of the proposed Transfer for the same price and on the same terms and conditions (except that Fly To Fit Franchise may substitute cash for any other form of payment).
If Fly To Fit Franchise does not exercise its right of first refusal, Franchisee may proceed with the Transfer, subject to the other terms and conditions of this Article.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, Fly To Fit Franchise has a right of first refusal before a franchisee engages in a transfer of their franchise. This right does not apply under specific circumstances, such as a transfer for convenience of ownership to a corporation or limited liability company, a transfer to a co-owner, or a transfer to a spouse, sibling, or child of an owner.
To exercise this right, Fly To Fit Franchise must receive a copy of the terms and conditions of the proposed transfer from the franchisee. Fly To Fit Franchise then has 30 days from the date of receipt to decide whether to purchase the assets subject to the transfer. This purchase would be for the same price and under the same terms and conditions as the proposed transfer, although Fly To Fit Franchise can substitute cash for any other form of payment.
If Fly To Fit Franchise decides not to exercise its right of first refusal within the 30-day period, the franchisee can proceed with the transfer, provided they meet all other terms and conditions outlined in the franchise agreement. This clause ensures that Fly To Fit maintains control over who enters their franchise system, safeguarding brand standards and the interests of other franchisees.
For a prospective franchisee, this means that selling the franchise to a third party requires Fly To Fit's approval, and Fly To Fit has the option to buy the franchise back itself before the franchisee can sell to someone else. This is a fairly standard clause in franchise agreements, designed to protect the integrity of the franchise system.