How is the Agreed Value determined for Checkersrallys in the event of an expiration (without renewal) of the franchise agreement?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, the determination of the Agreed Value for purchased assets upon the expiration of the franchise agreement without renewal involves a specific process. Initially, Checkersrallys has the option to purchase the franchisee's personal property used in the restaurant, excluding cash, short-term investments, and items not meeting their specifications. This option is enacted by providing an Appraisal Notice within ten days of the agreement's termination or expiration.
The Agreed Value is first determined through consultation between the franchisee and Checkersrallys. If an agreement cannot be reached within fifteen days after the Appraisal Notice, a different method is used. In the event of an expiration without renewal, the Agreed Value is set to the "Fair Market Value."
The Fair Market Value is defined as the amount a third-party purchaser would pay for the assets, assuming they would be used to operate a Checkersrallys restaurant under a valid franchise agreement with then-current standard terms, less the cost of any required remodeling. This approach ensures that the franchisee receives a fair price for their assets based on their potential use within the Checkersrallys system, while also accounting for any costs needed to bring the restaurant up to current brand standards.