First Right of Refusal Agreement (Franchise)

First Right of Refusal Agreement (Franchise)

Drafts a ROFR addendum to a U.S. Franchise Agreement that secures franchisor approval rights while preserving a lawful transfer path for the franchisee.

Prerequisites

1. Signed Franchise Agreement with transfer/consent and termination clauses.
2. Party details: legal names, entity type, jurisdiction, authorized signers.
3. Governing law, venue, and equitable-remedy preferences.
4. Transfer framework: single- vs. multi-unit ownership; definition of control transfer.
5. Negotiation parameters: notice/election days, completion windows, carve-out policy, valuation approach, remedy priorities.

Quick Start

Collect inputs before drafting:

Drafting Order

1. Heading and recitals
2. Definitions
3. ROFR grant and covered-transaction scope
4. Notice-package requirements
5. Franchisor election process
6. Non-exercise / approval-to-close rules
7. Value and economics matching
8. Closing conditions and costs
9. Reinstatement and relationship to Franchise Agreement
10. Warranties, breaches, and remedies
11. Miscellaneous (assignment, survival, amendment, integration, notices, signatures)

Use clause-level placeholders throughout:

[FRANCHISOR NAME]
[FRANCHISEE NAME]
[FRANCHISE EFFECTIVE DATE]
[GOVERNING LAW]
[NOTICE ADDRESS]

Trigger Logic

Notice Package Checklist

• Signed offer docs (LOI / term sheet / purchase agreement)
• Purchase price and all payment components
• Financing terms and contingencies
• Identity and affiliates of proposed purchaser
• Escrow/security assumptions, liabilities, excluded assets
• Proposed closing timeline and conditions
• Non-circumvention and no-bad-faith-structuring certifications

Timeline Blocks

Use numeric deadlines, not narrative-only terms:

Notice deadline:              ____ business days after offer
Franchisor exercise window:   ____ days after complete notice
Closing target:               ____ days after election
Third-party completion window: ____ days
Materiality trigger:          price change >____% OR >$____

Transfer Scope Matrix

Anti-Circumvention

Include provisions prohibiting:

• Step transactions structured to evade ROFR
• Pre-closing assignment/flip structures without disclosure
• Related-party or changed-party deals without refreshed notice and election period

Pitfalls and Checks

• Lock definitions first — every operative clause must reference defined terms.
• Harmonize with Franchise Agreement transfer provisions; state which document controls on conflict.
• Separate scope exceptions (family, estate, affiliate) from approval rights to reduce interpretation disputes.
• Preserve full remedy stack: injunctive relief, specific performance, attorneys' fees, and Franchise Agreement termination rights.
• Use fixed deadlines, not vague "reasonable" language, for all time-bound obligations.
• Never leave undefined attachment or exhibit references.
• If enforceability is jurisdiction-sensitive, flag for legal review: reasonableness of restraints on alienation, time-limit adequacy, remedy limits. [VERIFY]