Under what circumstances does Cinnaholic have the option to purchase the Bakery's assets upon expiration or termination of the agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) Except in the case of a renewal under Section 2, if this Agreement expires or is terminated or canceled for any reason, Franchisor shall have the option to purchase the Bakery, or a portion of the assets of the Bakery (including fixtures, furniture, equipment and improvements), and which may include at Franchisor's option, all of Franchisee's leasehold interest in and to the real estate upon which the Bakery is located, but not including real property (collectively, the "Assets"), to Franchisor. If Franchisor desires to purchase the Assets but the parties are unable to agree as to a purchase price and terms of such sale, the fair market value of the Assets (to be determined without goodwill or going concern value) shall be determined by three appraisers. Franchisee and Franchisor shall each select one appraiser, and the two appraisers so chosen shall select the third appraiser. The three appraisals shall be averaged to determine the purchase price. Franchisor shall have the right, at any time within 15 days after being advised in writing of the decision of the appraisers as aforesaid, to purchase the Assets at the purchase price as determined above. Each party shall be responsible for the costs and expenses of the appraiser it selected and the cost of the third appraiser shall be shared equally by the parties. Nothing contained in this Section shall be deemed to be a waiver by Franchisor of any default by Franchisee under this Agreement nor shall the exercise of the option to purchase the Assets contained in this Section affect any other rights or remedies granted to Franchisor hereunder or otherwise available to it.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic has the option to purchase the Bakery's assets if the Franchise Agreement expires or is terminated for any reason, except in the case of a renewal under Section 2 of the agreement. This includes the option to purchase all or a portion of the Bakery's assets, such as fixtures, furniture, equipment, and improvements. Cinnaholic can also opt to purchase the franchisee's leasehold interest in the real estate where the Bakery is located, but not the real property itself.
If Cinnaholic decides to purchase the assets but cannot agree with the franchisee on a price, the fair market value of the assets will be determined by three appraisers. The franchisee and Cinnaholic will each select one appraiser, and those two appraisers will then choose a third. The average of the three appraisals will determine the purchase price. Cinnaholic has 15 days after receiving written notice of the appraisers' decision to decide whether to purchase the assets at the determined price.
The franchisee is responsible for the costs of their chosen appraiser, and Cinnaholic is responsible for the costs of their appraiser. The cost of the third appraiser will be shared equally between both parties. The FDD specifies that Cinnaholic's option to purchase the assets does not waive any default by the franchisee under the agreement, nor does it affect any other rights or remedies available to Cinnaholic.