Who bears the cost of the appraisal if Bonchon does not elect to exercise any option following the appraisal?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
er termination or expiration of this Agreement, to purchase from you any or all of these items at fair market value, meaning depreciated book value or actual fair market value, whichever is less. If you and we cannot agree on a fair market value within a reasonable time, we will designate an independent appraiser, whose determination will be binding. We and you will each pay 50% of the fee charged by the independent appraiser. If we elect to exercise any right and option to purchase provided in this subparagraph, we will have the right to set off all amounts due from you under this Agreement, and the cost of the appraisal, if any, against any payments for the assets.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
Based on the 2025 Bonchon Franchise Disclosure Document, the cost of an appraisal in the event that Bonchon does not exercise its option to purchase the franchisee's assets is not explicitly addressed. However, the FDD does state that if Bonchon elects to exercise its option to purchase the franchisee's assets, Bonchon has the right to offset the cost of the appraisal against any payments for the assets.
In the event of a proposed assignment of the franchise, if there is a dispute regarding the value of the assets, Bonchon will select an independent appraiser, and the franchisee and Bonchon will equally share the expense of the appraisal. This appraisal will be binding on both parties.
Because the FDD does not explicitly state who bears the cost of the appraisal if Bonchon does not exercise its option to purchase the franchisee's assets, it would be prudent for a prospective franchisee to seek clarification from Bonchon regarding this matter. Understanding the financial responsibilities in such a scenario is crucial for making an informed investment decision.