Under what circumstances does Bevaris Alliance have the option to purchase a Bevaris Alliance franchisee's business?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
| Document download | |||
|---|---|---|---|
| Section in Franchise | |||
| Pr | ovision | Agreement | Summary which must be approved by us. |
| 1. | Bevaris approval of transfer | Section | We have the right to approve all transfers, which shall be |
| by franchisee | 16.11 | subject to the provisions of the Franchise Agreement. | |
| m. | Conditions for Bevaris | Section | Transferee approved by us, transfer fee paid, transferee |
| approval of transfer | 16.11 | not competitor, your account is current, you sign a release, transferee signs all documents, lender consents, and subordination agreements. | |
| n. | Bevaris' right of first refusal to acquire franchisee's business | Section 16.3 | Bevaris can match any offer for the purchase of Your franchise at Bevaris' option. |
| 0. | Bevaris' option to purchase Your business | Section 16.7 | Upon transfer, fair market value (but no value for goodwill), legal compliance, no assumption of your liabilities. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 17–18)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, Bevaris Alliance has the option to purchase a franchisee's business under specific circumstances related to the transfer of the franchise. Specifically, Bevaris Alliance can exercise this option upon the transfer of the franchise.
The purchase price for the franchisee's business will be based on the fair market value at the time of transfer. However, the valuation will explicitly exclude any consideration for goodwill, which is a common practice to reduce the purchase price. Additionally, Bevaris Alliance will ensure legal compliance during the purchase and will not assume any of the franchisee's existing liabilities.
This provision in the franchise agreement has significant implications for prospective franchisees. While it provides a potential exit strategy, the exclusion of goodwill from the valuation could result in a lower sale price than the franchisee might expect if selling to a third party. Franchisees should carefully consider these terms and potentially seek legal counsel to fully understand the financial implications before entering into an agreement with Bevaris Alliance. Understanding the valuation methods and potential liabilities is crucial for making an informed decision.