factual

In Michigan, does Kidokinetics have a right of first refusal to purchase a franchise?

Kidokinetics Franchise · 2024 FDD

Answer from 2024 FDD Document

  • (g) A provision which permits us to refuse to permit a transfer of ownership of a Franchise, except for good cause. This subdivision does not prevent us from exercising a right of first refusal to purchase the Franchise. Good cause shall include, but is not limited to:
    • (i) the failure of the proposed transferee to meet our then-current reasonable qualifications or standards.
      • (ii) the fact that the proposed transferee is a competitor of us or our subfranchisor.
    • (iii) the unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
    • (iv) your or proposed transferee's failure to pay any sums owing to us or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
  • (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 — RECEIPT (FDD pages 59–205)

What This Means (2024 FDD)

According to the 2024 Kidokinetics Franchise Disclosure Document, Kidokinetics is permitted to exercise a right of first refusal to purchase a franchise in Michigan. However, Michigan law prohibits Kidokinetics from unreasonably denying a transfer of ownership. Specifically, Kidokinetics can only refuse a transfer for "good cause".

Good cause, as defined in the FDD, includes situations where the proposed transferee does not meet Kidokinetics' then-current qualifications or standards, is a competitor of Kidokinetics or its subfranchisor, is unwilling to agree in writing to comply with all lawful obligations, or if the franchisee or proposed transferee has failed to pay sums owing to Kidokinetics or cure any default in the Franchise Agreement.

Additionally, Kidokinetics has 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. Kidokinetics also has the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the Franchise Agreement and failed to cure the breach.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.