In the Appraisal Process for determining the cash value of non-cash consideration for a Carvel franchise, who designates the appraisers?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If we cannot agree within a reasonable time on the equivalent cash value, the equivalent cash value will be determined by three independent appraisers using the following appraisal process (the "Appraisal Process"): (i) you will designate one appraiser and we will designate one appraiser, and the two appraisers that you and we designate will select a third appraiser, (ii) the majority determination of the three appraisers will be binding, (iii) each party will pay the appraiser's fee for the appraiser designated by that party, and (iv) you and we will each pay 50% of the third appraiser's fee.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, the appraisal process involves multiple parties in designating appraisers. If Carvel exercises its right of first refusal to purchase the franchisee's business and the parties cannot agree on the cash value of non-cash consideration, three independent appraisers will determine the equivalent cash value. The franchisee designates one appraiser, and Carvel designates another. The two appraisers chosen by the franchisee and Carvel then select a third appraiser.
The determination made by the majority of the three appraisers is binding on both parties. Each party is responsible for paying the appraiser's fee for the appraiser they designated. The fee for the third appraiser is split, with the franchisee and Carvel each paying 50%.
This appraisal process ensures an independent valuation of any non-cash consideration, which is a standard practice to protect both the franchisee and Carvel in the event of a disagreement during the right of first refusal process. Prospective franchisees should understand this process as it could impact them if they decide to sell their Carvel business and the franchisor elects to purchase it.