What price will Aw pay for assets purchased upon termination or expiration of the Franchise Agreement?
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, upon termination or expiration of the Franchise Agreement, Aw has the option to purchase certain assets from the franchisee. This includes fixtures, furniture, equipment, inventory, products, supplies, signs, and any items bearing Aw's marks. Aw must notify the franchisee of their intent to purchase these assets within 30 days of the termination or expiration date.
The price Aw will pay for these assets is the franchisee's cost or the fair market value, whichever is less. If Aw and the franchisee cannot agree on the fair market value, Aw will designate an independent appraiser, who must be acceptable to the franchisee, to determine the value, and that determination will be binding.
If Aw chooses to purchase these assets, they have the right to offset any amounts the franchisee owes to Aw under the Franchise Agreement. Aw can also deduct the cost of the appraisal, if any, from the payment for the assets. This means that a franchisee may not receive full payment for the assets if they have outstanding debts to Aw. This could create financial implications for the franchisee upon exiting the Aw system, especially if there are disputes over valuation or outstanding debts.