How long does Management Recruiters have to exercise its right of first refusal to purchase the franchise business?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee desires to sell or otherwise transfer the Franchise Business and assign this Agreement, Franchisee shall deliver to Franchisor written notice setting forth all the terms of the proposed transfer and assignment and all information that Franchisor requests concerning the proposed assignee. Franchisor shall have the option, during the thirty (30) days after receipt of the notice, to purchase the Franchise Business and accept assignment of this Agreement on the terms contained in the notice, provided that Franchisor shall have the right to substitute the cash equivalent of any non-cash consideration described in such notice. If Franchisor exercises this option, the purchase of the Franchise Business by Franchisor must be completed no later than thirty (30) days after Franchisor's notice to Franchisee of its purchase election. If Franchisor does not exercise this option during such thirty (30) day period then Franchisee may, during the following one hundred twenty (120) days, transfer the Franchise Business and assign this Agreement to the proposed assignee on the terms in the notice, provided that the assignment shall be made, without limitation, in compliance with this Section. Any proposed transfer not completed within such one hundred twenty (120) day period or any material change in the terms of the proposed transaction prior to closing shall constitute a new offer to which Franchisor shall have the right of first refusal and shall require compliance with this Section 13.5.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, if a franchisee desires to sell their franchise business, they must provide Management Recruiters with written notice of the proposed transfer, including all terms and information about the potential assignee. Management Recruiters then has a 30-day option period to decide whether to purchase the franchise business on those terms.
If Management Recruiters chooses to exercise its right of first refusal, the purchase must be completed within 30 days after Management Recruiters notifies the franchisee of its election to purchase. If Management Recruiters does not exercise its option within the initial 30-day period, the franchisee has 120 days to transfer the business to the proposed assignee under the original terms.
Any proposed transfer not completed within that 120-day window, or any material change in the terms before closing, is considered a new offer, which would trigger Management Recruiters' right of first refusal again. This ensures that Management Recruiters has the opportunity to reassess any changes to the sale terms.