Why Require A Purchase Option In A Franchise Agreement

A purchase option in a franchise agreement consists of a contractual clause stipulating that, under certain circumstances described in the agreement, the franchisor has the right, but not the obligation, to acquire the business or assets of its franchisee at a price and under conditions stipulated in the clause.

Such a provision is found in many franchise agreements.

Recently, in the context of designing and drafting a new franchise agreement, the franchisor raised the following interesting question: "Given the fact that I wish to develop my network by way of franchises, and not by myself or by way of subsidiaries, why should I stipulate a purchase option clause in my franchise agreement?"