Can Mr. Sandless require a franchisee to resell items not uniquely identified with the franchisor?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) 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 of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
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, Mr. Sandless is restricted from requiring a franchisee to resell items that are not uniquely identified with the franchisor. However, this restriction does not prevent Mr. Sandless from having a right of first refusal to purchase the assets of a franchise on the same terms as a third party.
Additionally, Mr. Sandless retains the right to acquire the assets of a franchise at market or appraised value if the franchisee has breached the franchise agreement and failed to correct the breach. This means that while Mr. Sandless cannot force a franchisee to resell generic items back to them, they can still purchase the entire business or its assets under certain conditions.
This provision protects franchisees from being forced to buy back items that are not specific to the Mr. Sandless brand, but it also allows Mr. Sandless to protect its interests in cases of transfer or breach of contract. Prospective franchisees should understand these conditions and how they might affect their business operations and potential exit strategies.