In Michigan, does Mr. Sandless have a right of first refusal to purchase a Mr. Sandless franchise?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause.
This 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:
(i) Failure of the proposed transferee to meet the franchisor's then-current reasonable qualifications or standards.
(ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor.
(iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.
(iv) 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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 30–34)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, Michigan prohibits certain unfair provisions that are sometimes in franchise documents. One of these provisions relates to the transfer of ownership of a franchise.
Specifically, Michigan law states that a franchise agreement cannot prevent a franchisor from exercising a right of first refusal to purchase the franchise. This means that if a Mr. Sandless franchisee in Michigan decides to sell their franchise, Mr. Sandless has the first option to buy it, before the franchisee can sell to a third party.
However, this right of first refusal does not allow Mr. Sandless to prevent a transfer of ownership for any reason. Michigan law stipulates that a franchisor can only refuse a transfer for "good cause," which includes the proposed buyer's failure to meet reasonable qualifications, being a competitor, unwillingness to comply with obligations, or failure to pay outstanding sums. This ensures that while Mr. Sandless has the first option to purchase the franchise, they cannot arbitrarily block a sale to a qualified buyer.