A franchise agreement provision that lets the franchisor match any third-party offer to acquire a franchisee's unit — protecting the franchisor against transfers to operators who don't fit the system.
Right of first refusal provisions appear in most franchise agreements as a safeguard against poorly-fit transfers. When a franchisee receives a bona fide offer to sell their unit, they must first present that offer to the franchisor, who has a defined window (typically 30-60 days) to match the offer's terms and acquire the unit themselves.
The franchisor benefits two ways. First, quality control: poorly-fit acquirers can be rejected by the franchisor matching the offer rather than approving the transfer. Second, strategic consolidation: when a franchisee exits, the franchisor has the option to buy back the unit and operate it as company-owned — useful for prime markets, brand-flagship locations, or as training units.
In practice, most franchisors don't exercise ROFR — operating a franchisee unit isn't always strategic — but the right exists as a check on transfers that would damage system quality.
ROFR is paired with the broader transfer-approval process disclosed in Item 17 of the FDD. Even when the franchisor declines to match a third-party offer, the proposed transferee must still pass franchisee qualification and complete training before the transfer is approved.
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