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Arkansas Code Title 4. Business and Commercial Law § 4-72-205. Transfer, assignment, or sale of franchise

Current as of March 28, 2024 | Updated by Findlaw Staff

(a) Except as provided in subsection (d) of this section, it is a violation of this subchapter for a franchisee or a franchise owner to transfer, assign, or sell a franchise or interest therein to another person unless the franchisee or the franchise owner first notifies the franchisor of that intention by written notice, stating in the notice of intent the prospective transferee's name, address, statement of financial qualification, and business experience during the previous five (5) years.

(b)(1) Within thirty (30) days after receipt of the notice under subsection (a) of this section, the franchisor shall:

(A) Approve in writing to the franchisee or to the franchise owner the sale, transfer, or assignment to the proposed transferee; or

(B) By written notice advise the franchisee and franchise owner of the unacceptability of the proposed transferee, stating a material deficiency relating to the character, financial ability, or business experience of the proposed transferee based on the application of the franchisor's then-existing standards consistently and uniformly applied to similarly situated franchisees operating within the franchise brand.

(2) If the franchisor does not reply within the specified thirty (30) days, the franchisor's approval is deemed granted.

(c) A transfer, assignment, or sale under this section shall not be valid unless the transferee agrees in writing to comply with the reasonable and legal requirements of the franchise then in effect.

(d) A franchisor's approval is not required for a transfer of a franchise by a franchisee or franchise owner to the spouse, child, or heir of the franchisee or franchise owner who is operationally and financially qualified.

(e) It is a violation of this subchapter for a franchisor or the franchisor's related entities, affiliates, or assigns to exercise a right of first refusal with respect to a franchisee's transfer, assignment, or sale in the case of a transfer, sale, or assignment under subsection (d) of this section.

(f) Except as provided in subsection (d) of this section, this section does not prohibit a franchisor from exercising a contractual right of first refusal to purchase a franchise or all or substantially all of the assets of a franchise business after receiving a bona fide offer from a proposed purchaser to purchase the franchise or assets of a franchise business on precisely the terms and conditions stated in the bona fide offer.

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Cite this article: FindLaw.com - Arkansas Code Title 4. Business and Commercial Law § 4-72-205. Transfer, assignment, or sale of franchise - last updated March 28, 2024 | https://codes.findlaw.com/ar/title-4-business-and-commercial-law/ar-code-sect-4-72-205/

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