Does Mr. Sandless have a right of first refusal to purchase the assets of a franchise?
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 Mr. Sandless's 2025 Franchise Disclosure Document, Mr. Sandless may have a right of first refusal to purchase the assets of a franchise. Specifically, Michigan law does not prevent Mr. Sandless from exercising 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. This right is also not prohibited if Mr. Sandless 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 has failed to cure the breach.
This means that if a Mr. Sandless franchisee in Michigan wants to sell their franchise, Mr. Sandless could have the first opportunity to buy it, matching the terms offered by another potential buyer. This could allow Mr. Sandless to maintain control over its franchise locations and potentially consolidate successful operations.
However, this right is subject to certain conditions. For instance, the third party must be a legitimate buyer, and the terms must be reasonable. If the franchisee has breached the franchise agreement and failed to correct it, Mr. Sandless may also have the right to acquire the assets at market or appraised value. It is important to note that these rights may be subject to state-specific laws and regulations, as indicated by the Michigan-specific disclosure.