What happens if the two appraisals of the Carls Jr. assets differ significantly?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. If CJR and Franchisee are unable to agree on the fair market value of the Assets within 30 days after Franchisee's receipt of CJR's notice of its intent to exercise its option to purchase the Assets, the fair market value shall be determined by two professionally certified appraisers, Franchisee selecting one and CJR selecting one within 60 days after Franchisee's receipt of CJR's notice of intent to exercise its purchase option.
If the higher appraisal is more than 10% greater than the other appraisal, the two appraisers shall select a third professionally certified appraiser who also shall appraise the fair market value of the Assets.
The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and shall be the Purchase Price.
- E. The appraisers shall be given full access to the Franchised Restaurant, the Franchised Location and Franchisee's books and records during customary business hours to conduct the appraisal and shall value the leasehold improvements, equipment, furnishings, fixtures, signs and inventory in accordance with the standards of this Section 23.
The appraisers' fees and costs shall be borne equally by CJR and Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, if Carl's Jr. and the franchisee cannot agree on the fair market value of the assets to be purchased, two certified appraisers will be selected, one by each party, to determine the value. These appraisals must occur within 60 days of the franchisee receiving notice of Carl's Jr.'s intent to purchase the assets.
If the higher appraisal is more than 10% greater than the lower appraisal, a third professionally certified appraiser will be selected by the initial two appraisers. This third appraiser will also assess the fair market value of the assets. The fees and costs of all appraisers are to be split equally between Carls Jr. and the franchisee.
The average value set by the appraisers, whether two or three, will be considered conclusive and will determine the final purchase price. This process ensures a fair valuation of the assets, especially in cases where the initial appraisals differ significantly, providing a mechanism to resolve valuation disputes through an independent third-party assessment.