What is the definition of 'fair and reasonable price' in the context of a City Wide franchise agreement in Washington?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.1 Upon termination or expiration of this Agreement, CITY WIDE will have an option, but not an obligation, to purchase from Franchisee all or any assets of the Franchised Business, including, without limitation all supplies, equipment, advertising materials, and other indicia bearing CITY WIDE's Marks, at fair market value. CITY WIDE may exercise this option ("Option to Purchase") by giving Franchisee written notice within sixty (60) calendar days after such termination. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to Franchisee will be designated by CITY WIDE, whose determination will be binding. If CITY WIDE elects to exercise any Option to Purchase as provided, it will have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment. CITY WIDE shall have up to twelve (12) months to pay the entirety of the agreed upon purchase price, upon its exercise of its Option to Purchase the business contained herein. CITY WIDE must pay at fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period.
- 20.2 If Franchisee or its owners propose to sell the Franchised Business (or its assets) or part or all of the ownership of Franchisee, Franchisee or its owners will deliver a bona fide, executed written offer to purchase same to CITY WIDE, who will, for a period of sixty (60) days from the date of delivery of such offer, have the right, but not the obligation, exercisable by written notice to Franchisee or its owners, to purchase the Franchised Business (or its assets) or such ownership for the price and payment terms contained in such bona fide offer, provided that CITY WIDE may substitute cash for any form of payment proposed in such offer and may require Franchisee to enter into an asset purchase agreement or similar agreement containing the terms and conditions that are customary for such a transaction ("Right of First Refusal"). If CITY WIDE does not exercise its Right of First Refusal, the offer may be accepted by Franchisee or its owners, subject to the prior written approval of CITY WIDE, as provided in Section 22 of
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
Based on the 2025 City Wide Franchise Disclosure Document, the term "fair market value" is referenced within the context of City Wide's option to purchase the franchisee's business assets upon termination or expiration of the franchise agreement. If City Wide chooses to exercise this option, they will purchase assets like supplies, equipment, and advertising materials bearing City Wide's marks. If City Wide and the franchisee cannot agree on the fair market value, City Wide will designate an independent appraiser, acceptable to the franchisee, whose determination will be binding.
City Wide has up to 12 months to pay the purchase price, but must pay 50% of the purchase price when exercising its Option to Purchase. City Wide can also deduct any amounts owed by the franchisee under the agreement, as well as the cost of the appraisal, from the purchase price.
Additionally, if the franchisee proposes to sell their business, they must provide City Wide with a written offer. City Wide then has 60 days to exercise its Right of First Refusal and purchase the business at the offered price and terms, substituting cash for any proposed payment method and requiring a customary asset purchase agreement. The FDD does not define "fair and reasonable price" outside of the context of City Wide's option to purchase the business or right of first refusal.