Upon termination of an Afuri Ramen Dumpling franchise, at what value will Afuri Ramen Dumpling purchase inventory?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- B. Sell the equipment and inventory to us, at fair market value for equipment and furnishings and at your invoice cost for inventory less a 10% restocking charge. We will not be liable for payment to you for intangibles, including goodwill;
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, in the event of termination, Afuri Ramen Dumpling has the option to purchase the franchisee's inventory. If Afuri Ramen Dumpling chooses to purchase the inventory, it will be valued at the franchisee's original invoice cost, but with a 10% deduction as a restocking charge. This means the franchisee will not receive the full cost they paid for the inventory.
This arrangement has significant implications for a franchisee considering exiting the Afuri Ramen Dumpling system. The franchisee needs to be aware that they may not recoup the full cost of their remaining inventory. The 10% restocking charge reduces the amount they will be compensated. This could impact the franchisee's ability to settle outstanding debts or reinvest in a new business venture.
It is important for prospective franchisees to carefully consider the potential financial impact of this clause. They should factor in potential inventory losses when evaluating the overall profitability and risks associated with the Afuri Ramen Dumpling franchise. Understanding the terms of inventory repurchase upon termination is a crucial part of assessing the financial implications of the franchise agreement.