Under what condition can Cilantro Taco Grill place the purchase price in escrow?

According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, if Cilantro Taco Grill elects to exercise its option to purchase a franchisee's assets, it has the right to offset certain costs against the payment. These offsets include fees for any independent appraiser due from the franchisee, all amounts owed by the franchisee to Cilantro Taco Grill or its affiliates, and any costs incurred in connection with any escrow arrangement. After these deductions, the remaining amount will be paid in cash.

In practical terms, this means that if Cilantro Taco Grill decides to buy back a franchise location, they can deduct any outstanding debts the franchisee owes them, including appraisal fees or other financial obligations. They can also deduct any costs associated with setting up an escrow account, such as legal fees. The remaining balance after these deductions is what the franchisee will receive in cash for the sale of their assets.

This arrangement benefits Cilantro Taco Grill by allowing them to recover outstanding debts and cover expenses related to the purchase. For a prospective franchisee, it's crucial to understand that any existing financial obligations to Cilantro Taco Grill or costs associated with the asset purchase could reduce the final payout they receive if Cilantro Taco Grill exercises its right to purchase the franchise back. Franchisees should maintain good financial standing and be aware of potential costs associated with appraisals and escrow to avoid surprises during a potential buyback scenario.

The closing of the purchase must occur no later than 30 days after the fair market value is determined. This timeline ensures a relatively quick resolution once the valuation process is complete. Franchisees should be prepared to finalize the sale promptly after the fair market value has been established to comply with this requirement.