Under what circumstances does Batteries Plus Bulbs have the option to purchase the assets of a franchise?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement expires or is terminated for any reason (other than the fault of Franchisor), Franchisor has the option, upon thirty (30) days written notice from the date of expiration or termination, to purchase from Franchisee any or all of the tangible and intangible assets relating to the Store (excluding any unsalable inventory, cash, short-term investments and accounts receivable) as Franchisor determines (collectively, the "Purchased Assets") and to an assignment of Franchisee's lease for (1) the Store premises (or, if an assignment is prohibited, a sublease for the full remaining term under the same provisions as Franchisee's lease) and (2) any other tangible leased assets used in operating the Store.
Franchisor may assign this option to purchase and assignment of leases separate and apart from the remainder of this Agreement.
Batteries are deemed salable only for starting, lighting and ignition batteries and sealed lead acid batteries in salable condition with a manufacturers code not exceeding nine (9) months from date of manufacturer's shipment.
For purposes of this Section, Franchisor periodically will establish, and provide to Franchisee in the Operations Manual or otherwise in writing, standards as to other products which are deemed "unsalable inventory."
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, Batteries Plus Bulbs has the option to purchase a franchise's assets if the Franchise Agreement expires or is terminated for any reason, except if the termination is due to the fault of Batteries Plus Bulbs itself. This grants Batteries Plus Bulbs significant control over the future of a store location after a franchise agreement ends.
The option allows Batteries Plus Bulbs to purchase tangible and intangible assets related to the store. However, this excludes unsalable inventory, cash, short-term investments, and accounts receivable. Batteries Plus Bulbs also has the option to take over the franchise's store lease or sublease the premises if a direct assignment is not permitted. Batteries Plus Bulbs must provide written notice 30 days from the date of expiration or termination.
Batteries Plus Bulbs can assign this purchase option and lease assignment to another party, separate from the rest of the agreement. The FDD specifies that only starting, lighting and ignition batteries and sealed lead acid batteries in salable condition with a manufacturers code not exceeding nine months from date of manufacturer's shipment are deemed salable. Batteries Plus Bulbs will establish standards for other products considered "unsalable inventory" and provide these standards to the franchisee in the Operations Manual or in writing.
This clause is important for potential franchisees to understand, as it defines the conditions under which they may be required to sell their business assets back to Batteries Plus Bulbs. It also clarifies what constitutes salable versus unsalable inventory, which would impact the valuation of the assets in such a purchase scenario. Franchisees should seek clarification on how these assets are valued and what recourse they have if they disagree with Batteries Plus Bulbs's assessment.