How is the purchase price determined for proprietary equipment, parts, fixtures, and furnishings if Bhc chooses to purchase them from the Master Franchisee after termination?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Within 30 days after termination, expiration or non-renewal of this Agreement, Franchisor will have the option, but not the obligation, to purchase all or any portion of Master Franchisee's reusable inventory, apparel containing the Marks, proprietary equipment, parts, supplies, fixtures, and furnishings owned and used by Master Franchisee in Master Franchisee's franchised operation.
Franchisor will be permitted to deduct and withdraw from the purchase price to be paid to Master Franchisee all sums then due and owing to Franchisor.
The purchase price for Master Franchisee's reusable inventory and apparel containing the Marks will be at Master Franchisee's cost for said items.
The purchase price for the proprietary equipment, parts, fixtures, and furnishings will be the fair market value thereof.
In determining the fair market value of such items Master Franchisee and Franchisor agree to exclude any factor or increment for goodwill or going concern value.
The purchase price to be paid to Master Franchisee will be paid in cash at the closing of any purchase which will occur no less than 30 days from the date Franchisor exercise Franchisor's option unless Master Franchisee and Franchisor are unable to agree on the fair market value of the assets to be purchased.
If Master Franchisee and Franchisor are unable to reach agreement within a reasonable time as to the fair market value of the items Franchisor has agreed to purchase, Master Franchisee and Franchisor will jointly designate an
independent appraiser, and the appraiser's determination will be binding. Master Franchisee and Franchisor must each pay 50% of the fee charged by the independent appraiser.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if the franchise agreement is terminated, Bhc has the option to purchase the Master Franchisee's proprietary equipment, parts, fixtures, and furnishings. The purchase price for these items will be the fair market value at the time of purchase, but specifically excluding any value attributed to goodwill or the ongoing concern of the business. This means Bhc will only pay for the tangible value of the assets themselves.
If Bhc and the Master Franchisee cannot agree on the fair market value, they will jointly designate an independent appraiser to determine the value. The appraiser's decision will be binding on both parties. The Master Franchisee and Bhc will each be responsible for paying 50% of the appraiser's fee.
This process ensures a neutral valuation of the assets. It prevents either party from unfairly inflating or deflating the price. For a prospective franchisee, this clause provides a clear mechanism for asset valuation upon termination. It protects the franchisee from being low-balled by Bhc, but also requires them to share the cost of the appraisal if an agreement cannot be reached.