If Carvel chooses to purchase my Franchised Business but disagrees with the cash value of non-cash consideration offered by a third party, what process is used to determine the equivalent cash value?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If you receive and want to accept a bona fide written offer from a third party to purchase the Franchised Business or substantially all the interests in you (collectively, the "Interest"), you must give us: (i) prompt written notice of the offer, stating the name and address of the prospective purchaser and the price and terms of the offer; and (ii) copies of all written documents and other information reasonably related to the offer provided by or to the prospective purchaser.
For 30 days after we receive the information required by this Section (the "Option Period"), we will have the option to purchase the Interest on the same terms as the third party offers; provided, however, if any portion of the consideration the thirdparty offers is other than cash, we will have the option of substituting the equivalent cash value.
- B.
Appraisal Process.
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, if a franchisee receives a legitimate offer from a third party to purchase their franchised business and wishes to accept it, the franchisee must promptly notify Carvel in writing. This notice must include the potential buyer's name and address, the proposed purchase price, the terms of the offer, and copies of all related documents. Carvel then has 30 days to decide whether to purchase the business on the same terms.
However, if the third-party offer includes non-cash consideration, Carvel has the option to substitute the equivalent cash value. If Carvel and the franchisee cannot agree on what the equivalent cash value of the non-cash consideration is, the FDD outlines a specific appraisal process to resolve the disagreement.
This appraisal process involves both the franchisee and Carvel each selecting an independent appraiser. These two appraisers then jointly choose a third independent appraiser. The decision made by the majority of these three appraisers will be binding on both Carvel and the franchisee. The franchisee and Carvel will each cover the fees for their respective appraiser, and they will split the cost of the third appraiser equally.