In Michigan, does Mrcool have a right of first refusal to purchase a franchise when a franchisee proposes a transfer of ownership?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
14.F. FRANCHISOR'S RIGHT OF FIRST REFUSAL
If Franchisee or an Owner desires to engage, in whole or in part, in a Transfer of Franchisee, this Agreement, Franchisee's Center, Franchisee's Center Facility, and/or Franchisee's Center Location, then Franchisee or such Owner (as applicable) must obtain a bona fide, signed written offer from the fully disclosed purchaser (the "Offer") and submit an exact copy of the Offer to Franchisor. Franchisor shall have 30 days after receipt of the Offer to decide whether Franchisor will purchase the interest in Franchisee, Franchisee's Center, Franchisee's Center Facility, and/or Franchisee's Center Location for the same price and upon the same terms contained in the Offer (however, Franchisor may substitute cash for any form of payment proposed in the Offer). If Franchisor notifies Franchisee that Franchisor intends to purchase the interest within said 30 day period, Franchisee or Owner (as applicable) must sell the interest to Franchisor. Franchisor will have at least an additional 60 days to prepare for closing. Franchisor shall be entitled to receive from Franchisee or Owner (as applicable) all customary representations and warranties given by Franchisee or Owner (as applicable) as the seller of the assets and/or the ownership interest or, at Franchisor's election, the representations and warranties contained in the offer. If Franchisor does not exercise its right of first refusal, Franchisee or Owner (as applicable) may complete the Transfer to the purchaser pursuant to and in accordance with the terms of the Offer, provided that separate and apart from this Article 14.F. right of first refusal, Franchisee complies with the terms of this Article 14. However, if the sale to the purchaser is not completed within 120 days after delivery of the Offer to Franchisor, or there is a material change in the terms of the sale, Franchisor will again have the right of first refusal specified in this Article 14.F. Franchisor's right of first refusal in this Article 14.F. shall not apply to any Transfer pursuant to Article 14.E. of this Agreement.
ARTICLE 15 RENEWAL OF FRANCHISE
15.A. FRANCHISEE'S RIGHT TO RENEW
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, Mrcool does have a right of first refusal regarding the transfer of a franchise in general. Article 14.F states that if a franchisee wants to transfer their franchise, they must first obtain a written offer from a potential buyer and submit it to Mrcool. Mrcool then has 30 days to decide if they want to purchase the franchise on the same terms as the offer, with the option to substitute cash for any proposed payment method. If Mrcool decides to purchase the franchise, they have an additional 60 days to prepare for closing.
However, the Michigan FDD Amendment included in Item 23 indicates that certain provisions that might be in the franchise documents are void and cannot be enforced against the franchisee because Michigan prohibits certain unfair provisions. These include a requirement that the franchisee assent to a release, assignment, novation, waiver, or estoppel that deprives them of rights and protections provided in the Michigan Franchise Investment Law.
Therefore, while Mrcool generally retains a right of first refusal, franchisees in Michigan should be aware that certain aspects of this right might be unenforceable if they conflict with Michigan state law. It would be prudent for prospective franchisees in Michigan to consult with a legal professional to fully understand their rights and protections under Michigan law regarding franchise transfers and rights of first refusal.