How does Card My Yard calculate the present value of lease payments?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
ondition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; and liabilities affecting the assets, contingent or otherwise; and a general release.
- (2) If we exercise our option under subsection (1) to acquire the assets of the Card My Yard business from you, the purchase price for your yard letters and yard signs will be zero ($0), and the purchase price for the other Card My Yard business assets we wish to acquire will be their fair market value, determined in a manner consistent with reasonable depreciation of the Card My Yard business' leasehold improvements, equipment, fixtures, furnishings, signs, materials and supplies. The age and condition of the improvements, equipment, fixtures, furnishings, decor, and signs of the Card My Yard business, will also be considered in determining the fair market value. We may exclude from the assets we elect to purchase cash or its equivalent and any leasehold improvements, equipment, fixtures, furnishings, signs, materials and supplies that are not necessary or appropriate (in function or quality) to the Card My Yard business' operation or that we have not approved as meeting the standards for Card My Yard businesses, and the purchase price will reflect such exclusions.
- (3) If we and you are unable to agree on the fair market value of the Card My Yard business' assets, or the fair rental value of theFranchise Location, such fair market value (or fair rental value) will be determined by th
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the FDD does not provide information on how Card My Yard calculates the present value of lease payments. The document does mention leasehold improvements in the context of asset valuation if Card My Yard exercises its option to acquire the assets of the franchisee's business. Specifically, it states that the fair market value of the business's assets will be determined in a manner consistent with reasonable depreciation of leasehold improvements, equipment, fixtures, furnishings, signs, materials, and supplies.
However, the FDD does not detail the specific methods or formulas used to determine the depreciation or fair market value of these assets, nor does it explain how the present value of lease payments is calculated. The document only mentions that if the franchisor and franchisee cannot agree on the fair market value of the business's assets, three independent appraisers will conduct an appraisal to determine the value.
Therefore, a prospective Card My Yard franchisee should seek clarification from the franchisor regarding the specific methodology used to calculate the present value of lease payments and how leasehold improvements are valued for potential acquisition by the franchisor. Understanding these calculations is crucial for assessing the financial implications of the franchise agreement and potential future scenarios.