Does Pearce Bespoke's right of first refusal to purchase a franchise prevent a transfer of ownership?
Pearce_Bespoke 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 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, a provision that grants Pearce Bespoke a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party does not prohibit a transfer of ownership.
This means that if a franchisee wants to sell their Pearce Bespoke franchise to a third party, Pearce Bespoke has the first opportunity to buy the franchise on the same terms offered by that third party. The franchisee must present the terms of the offer to Pearce Bespoke, and Pearce Bespoke can then decide whether to match the offer and purchase the franchise themselves.
However, Pearce Bespoke's right of first refusal does not outright prevent the transfer of ownership. If Pearce Bespoke declines to exercise its right of first refusal and does not match the third party's offer, the franchisee is then free to proceed with the sale to the original third-party buyer, assuming all other transfer requirements are met as outlined in the franchise agreement.