Does Mrcool have a right of first refusal to acquire a franchisee's business?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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). |
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| 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. |
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 have a right of first refusal to acquire a franchisee's business. Specifically, Mrcool has the right to match any offer a franchisee receives to purchase their center or the corporate entity operating the center.
This right of first refusal means that if a Mrcool franchisee receives an offer from a third party to buy their business, they must first present that offer to Mrcool. Mrcool then has the option to purchase the business on the same terms as the third-party offer. The franchisee cannot proceed with the sale to the third party unless Mrcool declines to exercise its right of first refusal.
For a prospective franchisee, this clause could impact their exit strategy. While it doesn't prevent a sale, it does give Mrcool control over who ultimately buys the business. This could potentially limit the pool of buyers or affect the sale price if Mrcool chooses to match a lower offer. Franchisees should consider this when planning for the future sale of their Mrcool franchise.
It is important for prospective franchisees to fully understand the implications of this right of first refusal and how it might affect their ability to sell their Mrcool business in the future. They should discuss this provision with Mrcool during their due diligence process and seek legal counsel to fully understand their rights and obligations.