Who is responsible for paying the cost of the appraisal if Aw purchases assets after termination and an appraisal is needed?
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, if Aw exercises its right to purchase the franchisee's assets upon termination or expiration of the franchise agreement, the cost of any appraisal needed to determine the fair market value can be offset against the payment Aw makes for those assets.
Specifically, if Aw and the franchisee cannot agree on the fair market value of the assets, Aw will designate an independent appraiser acceptable to the franchisee, and that appraiser's determination will be binding. The cost of this appraisal, if any, can be deducted from the payment Aw makes to the franchisee for the assets.
This arrangement benefits Aw, as it can ensure a fair price for the assets and reduce its payment by the appraisal cost. The franchisee should be aware that the appraisal cost will reduce the amount they receive for their assets upon termination or expiration of the franchise agreement.