Right of First Refusal

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  2. Georgia Code
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  7. Right of First Refusal

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  1. Notwithstanding the terms of any franchise agreement, sales and services agreement, or similar agreement, a franchisor, manufacturer, or distributor shall be permitted to exercise a right of first refusal to acquire a dealer's assets or ownership, in the event of a proposed change of ownership, or transfer of dealership assets, if all of the following requirements are met:
    1. The proposed transfer of the dealership or its assets is of more than 50 percent of the ownership or assets;
    2. The franchisor notifies the dealer in writing within 60 days of its receipt of the complete written proposal for the proposed sale or transfer on forms generally utilized by the franchisor for such purpose and containing the information required therein and all documents and agreements relating to the proposed sale or transfer;
    3. The exercise of the right of first refusal will result in the dealer and dealer's owners receiving the same or greater consideration as provided for through the terms of the contract related to the proposed change of ownership or transfer of dealership assets;
    4. The proposed change of 50 percent or more of the ownership or of the dealership assets does not involve the transfer or sale of assets or the transfer or issuance of stock by the dealer or one or more dealer owners to a designated family member or members, including a spouse, child, grandchild, spouse of a child or grandchild, brother, sister, or parent of the dealer owner; to a manager who has been employed in the dealership for at least four years and is otherwise qualified as a dealer operator; or to a partnership or corporation owned and controlled by one or more of such persons;
    5. The franchisor agrees to pay the reasonable expenses, including reasonable attorney's fees, which do not exceed the usual customary, and reasonable fees charged for similar work done for other clients incurred by the proposed new owner and transferee before the franchisor's exercise of its right of first refusal in negotiating and implementing the contract for the proposed change of ownership or transfer of dealership assets. However, payment of such expenses and attorney's fees shall not be required if the dealer has not submitted or caused to be submitted an accounting of those expenses within 20 days after the dealer's receipt of the franchisor's written request for such an accounting. Such an accounting may be requested by the franchisor before exercising its right of first refusal; and
    6. The franchisor agrees to comply with and be subject to the requirements and restraints as set forth in paragraphs (1) and (2) of subsection (a) of Code Section 10-1-664.1 and in subsection (b) of Code Section 10-1-664.1.
  2. Within the terms of a right of first refusal contract related to the proposed change of ownership or transfer of dealership assets:
    1. The franchisor, manufacturer, or distributor shall have the right to assume the dealer's lease for, or acquire the real property on which the franchise is located, on the same terms as those on which the real property or lease was to be sold or transferred to the proposed new owner in connection with the sale of the franchise, unless otherwise agreed to by the dealer and manufacturer or distributor. The franchisor, manufacturer, or distributor shall have the right to assign the lease or to convey the real property; and
    2. The franchisor, manufacturer, or distributor shall assume all of the duties, obligations, and liabilities contained in the agreements that were to be assumed by the proposed new owner and with respect to which the franchisor, manufacturer, or distributor exercised the right of first refusal, provided that the franchisor, manufacturer, or distributor has knowledge of such obligations at the time of the exercise of the right of first refusal.

(Code 1981, §10-1-663.1, enacted by Ga. L. 2000, p. 1175, § 2; Ga. L. 2017, p. 515, § 2/HB 469.)

The 2017 amendment, effective July 1, 2017, deleted the former introductory paragraph, which read: "There shall be a right of first refusal to purchase in favor of the franchisor if the dealer has entered into an agreement to transfer the dealership or its assets, provided that all the following qualifications and requirements are met:"; added subsection (a); redesignated former paragraphs (1) through (6) as present paragraphs (a)(1) through (a)(6), respectively; substituted "provided for through the terms of the contract related to the proposed change of ownership or transfer of dealership assets" for "is provided in the documents and agreements submitted to the franchisor under paragraph (2) of this Code section" in paragraph (a)(3); and added subsection (b).


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