Can Aw offset amounts due from the franchisee against the purchase price of assets after termination?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.7 Purchase of Assets. Upon termination or expiration of this Agreement, we shall have the right (but not the duty), to be exercised by notice of intent to do so within thirty (30) days after termination or expiration, to purchase for cash any or all fixtures, furniture, equipment, inventory, products, supplies, signs, and all items bearing the Marks, at your cost or fair market value, whichever is less. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to you shall be designated by us, and the designated appraiser's determination shall be binding. If we elect to exercise any option to purchase herein provided we shall have the right to set off all amounts due from you under this Agreement, and the cost of the appraisal, if any, against any payment therefore.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw has the right to offset any amounts owed by the franchisee against the purchase price of the franchisee's assets if Aw chooses to purchase those assets upon termination or expiration of the franchise agreement. This means that if a franchisee owes Aw money for any reason (royalties, marketing fees, etc.) at the time of termination, Aw can deduct those outstanding amounts from the money they pay the franchisee for the assets.
This provision protects Aw by ensuring they can recover outstanding debts from the franchisee. For a prospective franchisee, this means that any outstanding financial obligations to Aw at the time of termination will reduce the amount they receive for their business assets. The franchisee will only receive the net amount after Aw deducts what is owed.
It is important to note that Aw has the option, but not the obligation, to purchase the assets. If Aw does not exercise this option, this offset provision would not apply. The assets that Aw may purchase include fixtures, furniture, equipment, inventory, products, supplies, signs, and all items bearing Aw's marks. The purchase price will be the franchisee's cost or the fair market value, whichever is less. If the parties cannot agree on the fair market value, an independent appraiser acceptable to the franchisee will determine the value, and the franchisee will bear the cost of the appraisal.