How is the Agreed Value determined for Checkersrallys in the event of a termination 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 after the termination of the franchise agreement involves a consultation between the franchisee and Checkersrallys (or its assignee). If both parties can't agree on the value within 15 days of the Appraisal Notice, a specific method is used to determine the Agreed Value.
In the event of a termination of the agreement, the Agreed Value will be the lesser of two figures: the Appraised Asset Value and the Net Book Value. The FDD does not define "Appraised Asset Value" or "Net Book Value," so it is important to understand how these values are determined, as this could significantly impact the financial outcome for the franchisee upon termination.
Checkersrallys has the right to purchase the franchisee's personal property, including inventory of non-perishable items, materials, supplies, furniture, equipment, and signs, but excluding cash, short-term investments, and items not meeting Checkersrallys's specifications. Checkersrallys must provide an Appraisal Notice within ten days of the termination date to exercise this right. Franchisees are obligated to provide access to the restaurant and their books and records for inventories and purchase price determination.