How does Augusta Lawn Care state its property and equipment on its financial statements?
Augusta_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
The equipment, supplies, and inventory will be valued as follows:
- i.
The lower of depreciated value or fair market value of the equipment supplies and inventory; and
ii. Depreciated value of other tangible personal property calculated on the straight-line method over a five (5) year life, less any liens or encumbrances.
Augusta Lawn Care must send written notice to You within thirty (30) days after termination of this Agreement of its (or its designee s) election to exercise the option to purchase. If the parties do not agree on a price within the option period, the option period may be extended for up to fifteen (15) business days to permit appraisal by an independent appraiser who is mutually satisfactory to the parties. If the parties fail to agree upon an appraiser within the specified period, each will appoint an appraiser and the two appraisers thus appointed must agree on a third appraiser within ninety (90) days after termination who must determine the price for the physical assets of the Augusta Lawn Care Business in accordance with the standards specified above. This determination will be final and binding upon both Augusta Lawn Care, or Augusta Lawn Care's designee, as applicable, and You.
Augusta Lawn Care or its designee may exclude from the assets appraised any signs, equipment, inventory, and materials that are not reasonably necessary (in function or quality) to the operation of the Augusta Lawn Care Business, or that Augusta Lawn Care has not approved as meeting Augusta Lawn Care's thencurrent standards, the purchase price determined by the appraisal will reflect such exclusions (the "Purchase Price").
The Purchase Price shall be paid at a closing date not later than ninety (90) days after determination. Augusta Lawn Care has the right to offset against the Purchase Price any and all amounts that You or Your Related Parties owe Augusta Lawn Care and/or its Related Parties. At closing, You agree to deliver instruments transferring (i) good and marketable title to the assets purchased, free and clear of all liens and encumbrances, with all sales and transfer taxes paid by You (ii) all licenses and permits related to the business which can be assigned, (iii) the leasehold interest in the Approved Location, (iv) a release agreement signed by You and Your Related Parties in a form and substance acceptable to Augusta Lawn Care, and (v) such other documentation as we may reasonably request.
Source: Item 23 — RECEIPTS (FDD pages 44–184)
What This Means (2025 FDD)
According to the 2025 Augusta Lawn Care Franchise Disclosure Document, in the event that Augusta Lawn Care terminates the franchise agreement and wishes to purchase the franchisee's business assets, the equipment, supplies, and inventory will be valued at the lower of depreciated value or fair market value. Other tangible personal property will be valued at depreciated value calculated using the straight-line method over a five-year life, less any liens or encumbrances.
If Augusta Lawn Care decides to purchase the assets, they have the option to exclude any signs, equipment, inventory, and materials that are not reasonably necessary for the business's operation or do not meet Augusta Lawn Care's current standards. The purchase price will reflect these exclusions. The franchisor also has the right to offset any amounts owed to them by the franchisee against the purchase price.
After termination of the Augusta Lawn Care agreement, the franchisee must deliver good and marketable title to the assets purchased, free and clear of all liens and encumbrances, with all sales and transfer taxes paid by the franchisee. They must also transfer all assignable licenses and permits related to the business, the leasehold interest in the approved location, and a release agreement. This valuation method and the conditions surrounding the purchase of assets are important for a prospective franchisee to understand, as they dictate how the franchisee's investment in equipment and property will be treated upon termination of the agreement.