When Buona exercises its option to purchase a franchisee's business upon expiration or termination, is goodwill included in the fair market value?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| o. | Section 15.9 | We can match any bona fide written offer from a |
| Our right of first refusal to | qualified third party for all or any part of your | |
| acquire your business | Buona Businesses. | |
| p. Our option to purchase your business | Section 17.2 | Upon expiration or termination, we have the right to purchase improvements, furniture, fixtures, equipment, advertising and promotional materials, ingredients, products, materials, supplies, paper goods and any items bearing our Marks at the then-current fair market value, but specifically excluding any value for goodwill or going concern value. If you and us cannot agree on a fair market value within a reasonable time, an independent appraiser shall be designated by us, and his/her determination of fair market value shall be binding. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 52–60)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if Buona exercises its option to purchase a franchisee's business upon expiration or termination, the purchase price will be based on the fair market value of specific assets. These assets include improvements, furniture, fixtures, equipment, advertising and promotional materials, ingredients, products, materials, supplies, and paper goods, as well as any items bearing Buona's Marks.
However, the determination of fair market value specifically excludes any consideration for goodwill or going concern value. This means that the franchisee will not be compensated for the brand recognition, customer base, or potential future earnings of the business when Buona purchases it.
In the event that the franchisee and Buona cannot agree on a fair market value within a reasonable timeframe, an independent appraiser designated by Buona will determine the fair market value, and this determination will be binding on both parties. This process ensures an objective valuation, although the initial selection of the appraiser rests with Buona.