Does Monicals Pizza have a right of first refusal to purchase a franchise in Michigan?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
The subdivision does not prevent a Franchisor from exercising a right of first refusal to purchase the franchise.
Good cause shall include, but is not limited to:
The failure of the proposed transferee to meet the Franchisor's then-current reasonable qualifications or standards.
The fact that the proposed transferee is a competitor of the Franchisor or Subfranchisor.
The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
The failure of the Franchisee or proposed transferee to pay any sums owing to the Franchisor or to cure any default in the Franchise Agreement existing at the time of the proposed transfer.
A provision that requires the Franchisee to resell to the Franchisor items that are not uniquely identified with the Franchisor. This subdivision does not prohibit a provision that grants to a Franchisor 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 the Franchisor the right to acquire the assets of a franchise for the market or appraised value and has failed to cure the breach in the manner provided in ITEM 17(g).
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza Franchise Disclosure Document, the subdivision regarding receipts does not prevent Monicals Pizza from exercising a right of first refusal to purchase the franchise. This means that if a Monicals Pizza franchisee in Michigan decides to sell their franchise, Monicals Pizza has the initial option to buy the franchise on the same terms as any other potential buyer.
This right of first refusal allows Monicals Pizza to maintain control over its brand and the quality of its franchisees. It ensures that the company has the opportunity to approve any new ownership, preventing the franchise from falling into the hands of someone who may not meet their standards or who could be a competitor.
Several conditions constitute 'good cause' for Monicals Pizza to exercise its right of first refusal. These include if the proposed buyer doesn't meet Monicals Pizza's qualifications, is a competitor, is unwilling to comply with obligations, or if the franchisee has outstanding debts to Monicals Pizza. Additionally, Monicals Pizza can exercise this right to purchase franchise assets based on market or appraised value if the franchisee has failed to correct a breach as outlined in ITEM 17(g).
For a prospective Monicals Pizza franchisee in Michigan, this means that selling the franchise may require first offering it to Monicals Pizza, potentially adding time and complexity to the sale process. However, it also provides a degree of assurance that Monicals Pizza is invested in the long-term success and stability of its franchise network.