# What is Right of First Refusal? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Funding  
> **Canonical Citation:** [https://spidits.com/startup-glossary/rofr](https://spidits.com/startup-glossary/rofr)

## Definition
Right of First Refusal (ROFR) is a legal clause giving the startup (or its major investors) the right to purchase shares from a selling shareholder on the same terms before they can sell to an outsider.

## Architectural Mechanics & Deep Dive
Right of First Refusal (ROFR) is a legal clause giving the startup (or its major investors) the right to purchase shares from a selling shareholder on the same terms before they can sell to an outsider.

## Industry Applications & Real-World Use Cases
Control over private stock transfers

## Frequently Asked Questions

### Why do companies require ROFR?
To keep competitor companies or unapproved block buyers from acquiring ownership stakes in the company.

### Does ROFR affect secondary sales?
Yes. Any founder or employee selling secondary shares must first offer them to the company/board under ROFR.

## Related Terminology
- [secondary-offering](https://spidits.com/startup-glossary/secondary-offering)
- [drag-along-rights](https://spidits.com/startup-glossary/drag-along-rights)
- [term-sheet](https://spidits.com/startup-glossary/term-sheet)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*