What is the deadline for the Checkersrallys franchisee and Checkersrallys (or its assignee) to agree on the Agreed Value of the Purchased Assets after the Appraisal Notice?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
eement, 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).
The "Appraised Asset Value" shall be the amount which an arm's length purchaser would be willing to pay for the Purchased Assets, considering their age and
condition and without reference to their use in a Restaurant. The "Net Book Value" shall be the net book value of the Purchased Assets, as reflected on your books and records, provided all capital assets will be depreciated on a straight line basis over a reasonable period of time not to exceed 5 years, without residual value. The Fair Market Value, the Appraised Asset Value and/or Net Book Value will be determined by a member of a nationally recognized accounting firm (other than a firm which conducts audits of our financial statements) selected by us who has experience in the valuation of restaurant businesses (the "Appraiser"). We (or our assignee) will notify you of the identity of the Appraiser, who will make his determination and submit a written report ("Appraisal Report") to you and us (or our assignee) as soon as practicable, but in no event more than sixty (60) days after his appointment. You agree to promptly provide the Appraiser with such books and records as he or she may require, which you represent and warrant to be complete and accurate. In absence of such books and records or if the Appraiser is not satisfied with their completeness or accuracy, the Appraiser may make the determination of the Agreed Value on the basis of other sources and information he or she deems appropriate. The Appraiser's determination shall be final and binding on the parties hereto.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the franchisee and Checkersrallys (or its assignee) have 15 days to agree on the Agreed Value of the Purchased Assets after Checkersrallys issues an Appraisal Notice. If they cannot agree within this timeframe, the method for determining the Agreed 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, which is the amount an arm's length purchaser would pay for the assets, assuming they would be used for a Checkersrallys restaurant under a valid franchise agreement, less any required remodeling costs. If the agreement was terminated, the Agreed Value will be the lesser of the Appraised Asset Value and the Net Book Value.
This 15-day negotiation period is crucial for the franchisee, as it directly impacts the financial compensation they will receive for their assets. If the franchisee and Checkersrallys cannot reach an agreement, the determination of value shifts to a potentially less favorable method, depending on the reason for the end of the franchise agreement. Franchisees should be prepared to negotiate effectively and possibly seek professional advice to ensure they receive a fair valuation for their assets.
It is important to note that Checkersrallys (or its assignee) has the option to purchase the Purchased Assets at the Agreed Value by delivering notice within 30 days after submission of the Appraisal Report or the date an agreement is reached. This means that even after the Agreed Value is determined, Checkersrallys has a window of time to decide whether or not to proceed with the purchase. The closing of the purchase, if Checkersrallys exercises its option, will occur no later than 60 days after the exercise of their option to purchase the Purchased Assets.