How is the purchase price for the Purchased Assets determined by Beem Light Sauna?
Beem_Light_Sauna Franchise · 2025 FDDAnswer from 2025 FDD Document
e period between the expiration or termination of this Agreement through (i) the date on which we decide to decline our right to exercise this option (or the expiration of the option, if we fail to provide an Exercise Notice by the deadline) or (ii) the closing of our purchase. However, we may, at any time during that period, assume the management of the Studio ourselves or appoint a third party (who may be our Affiliate) to manage the Studio pursuant to the terms of Section 15.6 (Our Right to Operate).
- (c) Purchase Price. The purchase price for the Purchased Assets will be their fair market value for use in the operation of a non-franchised Competitive Business (and not a Studio). However, the purchase price will not include any value for any rights granted by this Agreement, goodwill attributable to the Marks, our brand image, any Proprietary Information or our other intellectual property rights, or participation in the network of Studios. For purposes of determining the fair market value of all equipment (including the exercise equipment and Technology System) used in operating the Studio, the equipment's useful life shall be determined to be no more than three years. If we and you cannot agree on fair market value for the Purchased Assets, we will select an independent appraiser after consultation with you, and his or her determination of fair market value will be the final and binding purchase price.
- (d) Closing. We will pay the purchase price at the closing, which will take place within 60 days after the purchase price is determined, although we may decide after the purchase price is determined not to complete the purchase. We may set off against the purchase price, and reduce the purchase price by, any and all amounts you owe us or our Affiliates.
Source: Item 23 — RECEIPT (FDD pages 71–230)
What This Means (2025 FDD)
According to the 2025 Beem Light Sauna Franchise Disclosure Document, the purchase price for the Purchased Assets, in the event that Beem Light Sauna exercises its option to purchase them, will be based on their fair market value. This fair market value is specifically defined as the value for use in operating a non-franchised competitive business, rather than a Beem Light Sauna Studio. This means the valuation excludes any value associated with the Beem Light Sauna franchise rights, brand image, trademarks, proprietary information, or participation in the Beem Light Sauna network.
For the purpose of determining the fair market value of equipment, including exercise equipment and the Technology System, the equipment's useful life will be considered to be no more than three years. This depreciation timeline could significantly impact the valuation of these assets. If Beem Light Sauna and the franchisee cannot agree on the fair market value, an independent appraiser will be selected after consultation with the franchisee. The appraiser's determination will then be the final and binding purchase price.
Beem Light Sauna will pay the purchase price within 60 days after the purchase price is determined. However, Beem Light Sauna retains the right to decide not to complete the purchase even after the price has been established. Additionally, Beem Light Sauna can offset any amounts owed by the franchisee or its affiliates against the purchase price, effectively reducing the payout. Beem Light Sauna is also entitled to customary representations, warranties, and indemnities in the asset purchase, covering aspects such as ownership, condition, title, liens, contract validity, and liabilities related to the assets and the franchisee's business before the purchase.
This arrangement carries implications for a prospective Beem Light Sauna franchisee. The valuation method focuses on the assets' value outside of the Beem Light Sauna system, potentially leading to a lower purchase price than if the assets were valued as part of an ongoing Beem Light Sauna studio. The short useful life assigned to equipment could further reduce the valuation. The franchisee bears the risk that Beem Light Sauna might withdraw from the purchase after the valuation is complete. The ability of Beem Light Sauna to offset debts against the purchase price and the requirement for the franchisee to provide extensive representations and warranties add further complexity and potential risk to the transaction.