Is It Illegal For A Franchisor To Offer First Right Of Refusal?
Question: Is it illegal for a franchisor to offer first right of refusal? Or can a franchisor offer a surrounding territory to an existing franchisee at a discount?
Answer: It is not illegal for a franchisor to do either of these actions, though they may be required to disclose such actions to you as a potential franchisee. Though it might not be illegal, that doesn’t mean it’s a good idea.
Most franchise companies learn, either from the experience of others or from their own mistakes, that offering rights of first refusal on additional territories is usually a nightmare scenario to administer.
You will rarely find a successful franchise company of any substance that is willing to grant such a territorial right to a franchisee. Read more.
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