What is the definition of 'Purchase Price' when Chicken Guy exercises its option to purchase assets?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Purchase Price. The purchase price for the Assets ("Purchase Price") shall be their fair market value, (or, for leased assets, the fair market value of Franchisee's lease) determined as of the effective date of purchase in a manner that accounts for reasonable depreciation and condition of the Assets; provided, however, that the Purchase Price shall take into account the termination of this Agreement.
Further, the Purchase Price for the Assets shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Franchised Restaurant nor any goodwill or "going concern" value for the Franchised Restaurant.
Chicken Guy may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and inventory that are not approved as meeting then-current standards for a Chicken Guy!
Restaurant or for which Franchisee cannot deliver a Bill of Sale in a form satisfactory to Chicken Guy.
- C. Certified Appraisers. If Chicken Guy and Franchisee are unable to agree on the fair market value of the Assets within 30 days after Franchisee's receipt of Chicken Guy's notice of its intent to exercise its option to purchase the Assets, the fair market value shall be determined by two professionally certified appraisers, Franchisee selecting one and Chicken Guy selecting one.
If the valuations set by the two appraisers differ by more than 10%, the two appraisers shall select a third professionally certified appraiser who also shall appraise the fair market value of the Assets.
The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and shall be the Purchase Price.
- D. Access to Franchised Restaurant. The appraisers shall be given full access to the Franchised Restaurant, the Franchised Location and Franchisee's books and records during customary business hours to conduct the appraisal and shall value the leasehold improvements, equipment, furnishings, fixtures, signs and inventory in accordance with the standards of this Section 24.
The appraisers' fees and costs shall be borne equally by Chicken Guy and Franchisee.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the "Purchase Price" for the assets is defined as their fair market value as of the purchase date. This valuation must account for reasonable depreciation and the condition of the assets. If the assets are leased, the purchase price will reflect the fair market value of the franchisee's lease, while also considering the termination of the franchise agreement.
Importantly, the Purchase Price calculation explicitly excludes any value associated with Chicken Guy's trademarks, service marks, or other commercial symbols, as well as any goodwill or "going concern" value of the restaurant. Chicken Guy also retains the right to exclude any equipment, vehicles, furnishings, fixtures, signs, and inventory that do not meet the brand's current standards or for which the franchisee cannot provide a satisfactory bill of sale.
If Chicken Guy and the franchisee cannot agree on the fair market value within 30 days of Chicken Guy's notice to purchase, the fair market value will be determined by two professionally certified appraisers, one chosen by each party. If these two appraisals differ by more than 10%, a third appraiser will be selected by the first two, and the average of all the appraisals will determine the final Purchase Price. The appraisers are to be given full access to the restaurant, location, and financial records to conduct their valuation, and their fees are to be split equally between Chicken Guy and the franchisee.