What is the 'Exercise Notice' in the context of Beem Light Sauna's right to purchase studio assets?
Beem_Light_Sauna Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Exercise of Option. Upon termination of this Agreement for any reason (other than your termination in accordance with Section 14.3 (Termination By You)) or expiration of this Agreement without our and your signing a successor franchise agreement, we have the option to purchase the inventory, supplies, Operating Assets, and other assets used in the operation of the Studio that we designate (the "Purchased Assets"). As a first step in exercising our option, we must give you written notice within 15 days after the date of termination or expiration of our intent to conduct due diligence (the "Exercise Notice"). We have the unrestricted right to exclude any assets we specify relating to the Studio from the Purchased Assets and not acquire them. You agree to provide us the financial statements and other information we reasonably require, and to allow us to inspect the Studio and its assets, to determine whether to exercise our option. If a Franchisee Party owns the Site, we may elect to include a fee simple interest in the Site as part of the Purchased Assets or, at our option, lease the Site from the Franchisee Party (or an Entity controlled by your Owner) for an initial ten-year term with one renewal term of five years (at our option) on commercially reasonable terms, which shall include the right to sublease the Site to another party. You and your Owners agree to cause your Affiliate or any Entity controlled by such Owner to comply with these requirements. If a
Source: Item 23 — RECEIPT (FDD pages 71–230)
What This Means (2025 FDD)
According to Beem Light Sauna's 2025 Franchise Disclosure Document, the 'Exercise Notice' is a written notification that Beem Light Sauna must provide to the franchisee within 15 days after the termination or expiration of the franchise agreement. This notice indicates Beem Light Sauna's intent to conduct due diligence regarding the potential purchase of the studio's assets. The termination of the agreement must not be due to the franchisee terminating it in accordance with Section 14.3.
This 'Exercise Notice' is the initial step in Beem Light Sauna's process of potentially purchasing the franchisee's studio assets. After providing the notice, Beem Light Sauna has the right to inspect the studio and its assets, and to request financial statements and other information to determine whether to proceed with the purchase. Beem Light Sauna is not obligated to purchase all assets and can exclude specific assets from the purchase.
If Beem Light Sauna decides not to exercise its option to purchase the studio, or fails to provide the 'Exercise Notice' by the deadline, the franchisee may be required to continue operating the studio under the terms of the franchise agreement until Beem Light Sauna makes a final decision or the option expires. This ensures continued operation of the Beem Light Sauna studio during the transition period.
For a prospective franchisee, understanding the implications of the 'Exercise Notice' is crucial. It outlines the process and timeline if Beem Light Sauna decides to purchase the studio assets upon termination or expiration of the franchise agreement. Franchisees should be prepared to provide the necessary information and allow inspections to facilitate the due diligence process if they receive an Exercise Notice.