At what price will Baya Bar purchase the Franchisee's assets upon termination or expiration of the Franchise Agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon termination or expiration of this Agreement, all rights and licenses granted hereunder to Franchisee shall immediately terminate and Franchisee and each Principal, if any, shall:
- 18.1.1 immediately cease to operate the Franchised Business, and shall not thereafter, directly or indirectly identify himself, herself or itself as a current Baya Bar owner, franchisee or licensee;
- 18.1.2 immediately and permanently cease to use the Marks, any imitation of any Mark, Franchisor's designs, copyrighted material or other intellectual property, confidential or proprietary material or indicia of the Franchised Business, or use any trade name, trade or service mark or other commercial symbol that suggests an association with Franchisor, and/or Franchisor's affiliate(s), or the System. In particular, Franchisee shall cease to use, without limitation, all signs, billboards, advertising materials, displays, stationery, forms and any other articles, which display the Marks;
- 18.1.3 take such action as may be necessary to cancel any assumed name or equivalent registration that contains the Mark or any other service mark or
trademark of Franchisor, and Franchisee shall furnish Franchisor with evidence of compliance with this obligation which is satisfactory to Franchisor, within five (5) days after termination or expiration of this Agreement;
18.1.4 promptly pay all sums owing to Franchisor and its affiliates.
Such sums shall include all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor as a result of any default by Franchisee.
The payment obligation herein shall give rise to and remain, until paid in full, a lien in favor of Franchisor against any and all of the personal property, furnishings, equipment, fixtures, and inventory owned by Franchisee and located at the Franchised Business location at the time of default;
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document for Baya Bar does not specify the price or terms under which Baya Bar will purchase a franchisee's assets upon termination or expiration of the franchise agreement. The document outlines the obligations of the franchisee upon termination or expiration, including ceasing operations, discontinuing the use of Baya Bar's intellectual property, and paying all sums owed to Baya Bar and its affiliates. It also mentions a lien in favor of Baya Bar against the franchisee's personal property at the franchised location until all debts are paid. However, it does not detail any obligation or terms for Baya Bar to purchase the franchisee's assets.
This lack of detail is important for potential franchisees because the resale value of assets is a key factor in assessing the overall financial risk and return on investment. Without a clearly defined buy-back agreement, a franchisee may face uncertainty in recouping their investment in equipment, inventory, and other assets if the franchise is terminated or not renewed. This could leave the franchisee with the burden of selling off assets themselves, potentially at a loss.
Prospective Baya Bar franchisees should seek clarification from Baya Bar regarding their policy on asset repurchase. Specifically, they should inquire about whether Baya Bar has a standard practice of purchasing assets, the valuation method used to determine the purchase price (e.g., fair market value, depreciated cost), and any conditions or limitations that may apply. Understanding these terms is crucial for making an informed decision about investing in a Baya Bar franchise.