What happens if the franchisee and Checkers cannot agree on the 'Agreed Value' of the Purchased Assets?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, if the franchisee and Checkers cannot agree on the 'Agreed Value' of the Purchased Assets within 15 days after the Appraisal Notice, the method of determining the value depends on whether the agreement expired without renewal or was terminated.
In the event of an expiration without renewal, the 'Agreed Value' will be the 'Fair Market Value'. This is defined as the amount an arm's-length purchaser would pay for the assets, assuming they would be used to operate a Checkers restaurant under a valid franchise agreement with then-current terms, less the cost of any required remodeling.
However, if the agreement was terminated, the 'Agreed Value' will be the lesser of the 'Appraised Asset Value' and the 'Net Book Value'. The 'Appraised Asset Value' is what an arm's-length purchaser would pay for the assets, considering their age and condition, without regard to their use in a restaurant. The 'Net Book Value' is the net book value of the assets on the franchisee's books, depreciated on a straight-line basis over a period not exceeding 5 years, with no residual value.