What dollar breakdown must be included in the purchase agreement when transferring a Chem Dry franchise?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
The purchase agreement between FRANCHISEE and the transferee must include: (a) a dollar breakdown of the sale price allocated to goodwill, covenant not to compete, van(s), cleaning equipment, cleaning supplies, and office equipment and supplies; and (b) a statement that FRANCHISEE has made a full disclosure to the transferee and that the parties have has agreed upon the disposition of all of FRANCHISEE'S outstanding obligations and accounts receivable;
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the purchase agreement between the franchisee and the transferee must include a detailed breakdown of the sale price. This breakdown must allocate the sale price to specific assets.
Specifically, the Chem Dry purchase agreement must show the dollar amount allocated to goodwill, which represents the value of the brand's reputation and customer base. It must also specify the amount allocated to the covenant not to compete, which is an agreement preventing the seller from opening a competing business nearby.
In addition to these intangible assets, the agreement must also break down the value of tangible assets being transferred, including the van(s), cleaning equipment, cleaning supplies, and office equipment and supplies. This detailed allocation ensures transparency and helps both parties understand the value of each component of the business being transferred.