Who bears the cost of the Appraiser when Checkers exercises its option to purchase the franchised restaurant?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration (without renewal) of this Agreement, we have the right, exercisable by giving notice thereof ("Appraisal Notice") within ten (10) days after the date of such termination or expiration, to require that a determination be made of the "Agreed Value" (as defined below) of all the personal property used in the Franchised Restaurant which you own, including inventory of non-perishable products, materials, supplies, furniture, equipment, signs, but excluding any cash and short-term investments and any items not meeting our specifications for Restaurants (the "Purchased Assets"). At any time following our providing you an Appraisal Notice, we shall have the unrestricted right to assign this option to purchase separate and apart from the remainder of this Agreement, including, without limitation, to another third-party franchisee. Upon such notice, you may not sell or remove any of the personal property of the Franchised Restaurant from the Premises and must give us (or our assignee), our (or our assignee's) designated agents and the "Appraiser" (as defined below) full access to the Franchised Restaurant and all of your books and records at any time during customary business hours in order to conduct inventories and determine the purchase price for the Purchased Assets.
- (b) The Agreed Value shall be determined by consultation between you and us (or our assignee). If you and we (or our assignee) are unable to agree on the Agreed Value of the Purchased Assets within fifteen (15) days after the Appraisal Notice, then the Agreed Value will be as follows: (a) in the event of an expiration (without renewal) of this Agreement, the Agreed Value shall be the "Fair Market Value," consisting of the amount which an arm's length purchaser would be willing to pay for the Purchased Assets, assuming that the Purchased Assets would be used for the operation of a Restaurant under a valid franchise agreement reflecting the thencurrent (or if we are not offering franchises at that time, then the most recent) standard terms upon which we offer franchises for Restaurants, less the cost of any required remodeling; and (b) in the event of any termination of this Agreement, the Agreed Value shall be the lesser of the Appraised Asset Value (as defined below) and the Net Book Value (as defined below).
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the responsibility for covering the appraiser's costs isn't explicitly detailed when Checkers exercises its option to purchase the franchised restaurant. The document outlines the process for determining the 'Agreed Value' of the Purchased Assets, which involves consultation between the franchisee and Checkers. If an agreement cannot be reached within fifteen days after the Appraisal Notice, an appraiser is involved to determine the Fair Market Value. However, the FDD does not specify which party is responsible for paying the appraiser's fees.
Given this lack of clarity, it is important for prospective franchisees to seek clarification from Checkers regarding the allocation of appraisal costs. Understanding this financial responsibility is crucial for franchisees to accurately assess the potential costs associated with the termination or expiration of their franchise agreement.
Prospective franchisees should ask Checkers to provide specific details on who bears the cost of the appraiser in the event Checkers exercises its option to purchase the franchised restaurant. This information will help franchisees make informed decisions and avoid potential financial surprises.