Does Mrcool always waive its right of first refusal during a franchise transfer?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
ent, which may be granted or withheld in our discretion. |
| m. | Conditions for franchisor's approval of transfer | 14.C. | For approval of your transfer, you must provide us with 30 days prior written notice of the proposed transfer; you and your Owners must not have defaulted in your obligations under the Franchise Agreement and all other agreements with us; you and your Owners must be in compliance with your obligations under the Franchise Agreement and all other agreements with us; the transferee must agree to be bound by all of the terms and provisions of the Franchise Agreement; the transferee's owners and their spouses must personally guarantee all of the terms and provisions of the Franchise Agreement; you and your Owners and their spouses must sign a general release in favor of us; the transfer must provide for the assignment and/or ownership of the approved location for the Franchised Business, and the transferees continued use and occupancy of such location throughout the term of the Franchise Agreement; the assets of the Franchised Business must be transferred to the transferee; the transferee and the transferee's owners and managers, at the transferee's expense must complete our training programs; we waive our right of first refusal; and we approve of the transfer and transferee in writing and subject to our discretion; you pay the Transfer Fee (subject to applicable state laws). |
|---|---|---|---|
| n. | Franchisor's right of first refusal to acquire franchisee's business | 14.F. | We have the right to match any offer to purchase your Center or the Corporate Entity operating your Center. |
| o. | Franchisor's option to purchase | Not | Not applicable. |
| franchisee's business | applicable | ||
| p. | Death or disability of franchisee | 14.D. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, Mrcool does not always waive its right of first refusal during a franchise transfer. While one of the conditions for Mrcool's approval of a transfer is that they waive their right of first refusal, Mrcool also retains the right to match any offer to purchase your center or the corporate entity operating your center.
This means that even if a franchisee finds a buyer and meets all the other conditions for transfer, Mrcool still has the option to step in and purchase the franchise on the same terms as the proposed buyer. This right is called the 'right of first refusal.'
For a prospective franchisee, this implies that selling the franchise may not always be a straightforward process. Mrcool has the power to potentially disrupt a sale if it decides the location or business is strategically valuable to them. A franchisee looking to sell should be aware that Mrcool could exercise its right of first refusal, potentially delaying or preventing the sale to their preferred buyer.