What is the standard used to determine the price Bevaris Alliance will pay when repurchasing equipment?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 19.4 Repurchase of equipment. On termination or expiration of this agreement for any reason, the Franchisor may, at its option, repurchase any plant, equipment, fixtures and fittings used by the Franchisee for the purpose of the Franchisee's Business including the Equipment, at such price as the Franchisor reasonably considers to be its current market value.
The Franchisee shall, at its expense, arrange all insurance and transport of such plant and equipment in accordance with the Franchisor's reasonable instructions.
If the Franchisor does not exercise its option, the Franchisee shall be free to sell such items as it chooses.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 FDD, Bevaris Alliance has the option to repurchase equipment, plant, fixtures, and fittings from the franchisee upon termination or expiration of the franchise agreement. The repurchase price will be the current market value of the items, as reasonably determined by Bevaris Alliance.
This clause provides Bevaris Alliance with a mechanism to recover assets used in the operation of the franchise. For a franchisee, this means that upon exiting the franchise system, they may be required to sell their equipment back to Bevaris Alliance at a price that Bevaris Alliance deems to be the current market value. The franchisee is responsible for the insurance and transport costs associated with the return of the equipment, following Bevaris Alliance's instructions.
If Bevaris Alliance chooses not to exercise its option to repurchase the equipment, the franchisee is then free to sell the items to a third party. This provides some flexibility for the franchisee, but the initial option rests with Bevaris Alliance. Franchisees should be aware of this clause as it can impact their financial return upon exiting the franchise agreement.