Upon termination or expiration of the Craters & Freighters Franchise Agreement, does Craters & Freighters have the option to purchase the franchisee's assets, and if so, at what price?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item | Provision | Section in Franchise Agreement | Summary |
|---|---|---|---|
| o. | Franchisor's option to purchase franchisee's business | Section 20.2 | Upon the termination or expiration of the Franchise Agreement, we will have the option, but not the obligation, to purchase any and all of the assets used by you to operate the Franchised Business at a purchase price equal to net depreciated book value. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTIONS (FDD pages 36–44)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, upon the termination or expiration of the Franchise Agreement, Craters & Freighters has the option to purchase the franchisee's business assets. However, this is not an obligation, but merely an option for Craters & Freighters. If Craters & Freighters chooses to exercise this option, the purchase price for the assets will be equal to their net depreciated book value.
This provision means that if a franchisee's agreement ends, Craters & Freighters could potentially buy the assets of the business, such as equipment and inventory. The price would be based on the book value of those assets, taking into account depreciation, which could be significantly lower than their market value or replacement cost.
For a prospective franchisee, this implies that they may not be able to sell their business assets at full market value if Craters & Freighters decides to exercise its purchase option upon termination or expiration of the agreement. It is important for potential franchisees to understand how asset depreciation is calculated and what the potential financial implications are at the end of the franchise term.